This Stock Market is relative - basically, low interest rates mean the market should be higher, as P/E ratios should reflect a willingness to accept less return than normal with ultra-low rates.
But with rates rising, by the same logic, the market will fall.
And because rates are starting so low, they relative rate of increase is massive - a rise from 1% to 1.25% is a 25% increase!
The only way for the market to keep up is for earnings to increase by a similar amount...or for share prices to fall by that amount, and we know earnings will not be rising by anything like 25% any time soon.
This market may still have some room to run, but with every interest rate rise, the long run gets shorter. It comes down to math...
Add in a small recession, and this adjustment will be very significant indeed.
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