A near-term pullback, then the third bubble in 100 years is coming, says strategist. Here’s how to get ready.

Among the dozens of central bank meetings jammed this week, the Fed has been seen stealing the show with a low start and early hints of a rate hike.

After “the worst inflation call in history” and its credibility shattered, President Jerome Powell will need to take matters into its own hands, says Allianz’s chief adviser Mohamed El-Erian. So we’ll see if a tougher Fed hits the S&P 500, which slipped to a new high on Friday despite higher consumer prices, off Santa’s bullish trajectory.

to our site Today’s call From a team at Stifel, led by Barry Bannister, warned of another bubble for ages, thanks to “bad monetary and fiscal decisions since COVID-19.”

And you may enjoy any Santa rally while it lasts, as the team sees a near-term correction driving the S&P 500 to a 4,000-second low by the first quarter of next year. And then…

Later in 2022-23E, we believe the Fed ‘behind the curve’ could create a third bubble in 100 years, by 2023 to 6750 for the S&P 500 (Nasdaq). [approximately] 25,000),” the Stifel team said.

“Populism (apparently embraced by the Federal Reserve and the Treasury) leads to bad choices and even worse outcomes. Price suppression may again create a bubble that bursts (it always does), followed by a lost decade.

She said investors should look into history to prove that this could happen. The S&P 500 fell nearly 20% in the third quarter of 1998 before the dotcom bubble burst in 1999-2000. Bannister and the team said the Fed’s “late” tightening from the second half of 1999 to the first half of next year could not stop it.

The strategists added: “The same thing happened in the 1920s, with a -10.7% drop in mid-December 1928 with prices rising before the October 1929 crash.”

The only way to prevent such a bubble is for the Fed to heed its financial stability report, where it warned of increased risk appetite among retail investors, soaring stock and real estate valuations, and “slant optimism”.

“However, policy may arrive too late, and if the market continues to ‘risk’ with a low equity risk premium and if the 10-year Treasury Inflation Protected (TIPS) yield remains pent-up at -1.0% due to global central banks, P/ E. [price-earnings] They said that the convex bubble may occur in 2022-2023 AH.

Although huge may be out of reach, they provide a clue to near-term survival. Bannister and his team said that if both the S&P 500 and commodities weaken simultaneously — they expect it due to a stronger dollar, slower growth in China, Fed exit signals and tight global liquidity — investors could turn to the S&P 500 defenses. So care Sanitary, essential consumables, utilities and communications are the preferred safety points at the moment.

commotion

We have mergers and acquisitions on Monday. Pfizer PFE
Buy Arena Pharma ARNA
In a deal worth $6.7 billion. SPX Flow FLOW software suite
It agreed to buy $3.8 billion from Lone Funds.

South African researchers say a two-shot course from Pfizer and BNTX from BioNTech
The COVID-19 vaccine is about 23% effective against the omicron coronavirus variant, but may prevent serious disease. Pfizer also got an upgrade to buy into UBS, which expects $50 billion in COVID franchise sales next year.

genus PTON
The lightning-fast shooting rekindled in a plot twist in the “Sex and the City” reboot that was partly blamed for some of the stock sell-off, with New ad Featuring actor Chris Noth… he’s back on his bike.

Monday is quiet on the data front, but the rest of the week is busy enough with retail sales and some manufacturing metrics. The Federal Reserve’s two-day meeting begins on Tuesday. Here is a preview.

Time magazine named Tesla TSLA
CEO Elon Musk person of the Year.

Iron ore prices rose amid speculation that China will provide fiscal stimulus in early 2022, after the country’s top officials said at a weekend meeting that they wanted to stabilize the economy.

Celebrity chefs like Jose Andres are among those helping Kentucky, which has borne the brunt of a series of deadly and devastating hurricanes that hit multiple states this weekend.

graph

Do you bet on bitcoin? A poll by Jim Reed and other Deutsche Bank strategists found that the older crowd is less optimistic about gains than the younger crowd.

markets

Stock DJIA

SPX

COMP
It was down in early trading, oil CL00
less. It was a mixed day for Asian stocks, while it was a day for Europe XX: SXXP
Growing, while Bitcoin BTCUSD
And other cryptocurrencies are much softer. USDTRY Defeated Turkish Lira
It was crushed again after Standard & Poor’s warned of a rating downgrade. Then the central bank intervened.

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An Oregon elementary school called the cops over a friendly, but foul-mouthed, snack-stealing crow.

Fans mourn the author of “Interview with the Vampire” Anne Rice, who passed away at the age of 80. Here is her son’s farewell:

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