U.S. stocks could rally out of Fed’s rate meeting on Wednesday

on Mar 14, 2022
  • U.S. Fed likely to raise interest rates by 25 basis points on Wednesday.
  • Barry Knapp says the U.S. stocks could rally out of the rate meeting.
  • The Ironside Macroeconomics’ expert remains positive on U.S. equities.

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Fed Chair Jerome Powell is expected to sign a 25 basis points increase in interest rates on Wednesday and Ironside Macroeconomics’ director of research says the U.S. stocks could rally on the big announcement.

Knapp’s remarks on CNBC’s ‘The Exchange’

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According to Barry Knapp, the rate hike is priced into the S&P 500 index that’s already down about 13% for the year. On CNBC’s “The Exchange”, he said:

We’re in a position to rally out of Wednesday’s meeting because we’ve had this appropriate adjustment, because we’ve had a big move in expectations around rate policy, and we’ve even moved interest rate vol and how that permeates across other asset classes.

U.S. inflation climbed again to 7.9% in February. Still, the Federal Reserve is likely to be less aggressive than previously indicated, considering the economic repercussions of the Ukraine war.

Knapp remains bullish on the U.S. stocks

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Despite fears of stagflation, Knapp continues to be positive on the U.S. stocks as long as inflation comes down to around 4.0%. He said:

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I think the bond market is not, but the corporate sector could be fine at something around or less than 4.0% inflation. So, I don’t think stagflation is a big issue. I’m also not worried about consumers’ ability to absorb higher gasoline prices. They’ll be fine.

The U.S. Crude price has come down to around $100 a barrel now after hitting $130 a barrel last week as President Biden banned Russian oil and gas.  

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