Shares are down today as the FANG stocks retreat due to investor concern about growth companies in a period of rising rates. This is only a one-day impact though. The question is whether the caution regarding riskier assets will endure.
No sign this is risk-off yet
Earlier today, I made the point that a higher discount rate from rising interest rates is largely offset by likely higher earnings in a higher growth scenario. To the degree that long rates are rising because investors no longer fear the Fed will squash the economy, we should expect investors to also be optimistic about earnings growth. So I am sceptical that we are going to see risk off here.
Instead, what I've been saying is that bear steepening is only bearish when the credit cycle turns. And we're not there yet -- just the ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.