Research: Equities roar as Fed eyes next challenge

As equities party like it’s 1999, is Fed ready for a downturn?

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

In 2020, equities are partying like it’s 1999

  • The three sectors that led the market in the 1990s also won in 2010s
  • The three weakest sectors in 1990s also did poorly in the 2010s
  • Robust growth in 2020s could boost tech, consumer discretionary stocks
  • It could, however, be detrimental to utilities and consumer staples
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Is the Fed up to the next challenge?

  • Is the Fed well-equipped to tackle an economic downturn?
  • Cutting already low rates to near zero might not be stimulatory
  • Fed might buy distressed private assets like during Great Recession
  • QE rallied equities but no evidence to show it enhanced growth
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