Taps Coogan – March 17th, 2022

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Wednesday’s FOMC meeting, which saw a single 25 basis point rate hike and a dot-plot pointing to ‘just’ six additional hikes this year, was sufficiently dovish to push Goldman’s non-profitable tech index up 12%, the biggest single day jump in its history, as the following chart from Liz Ann Sonders highlights.

Considering that before the Ukraine War kicked off, there had been widespread expectations for a double hike and an immediate start to QT, and considering that the market is still pricing in essentially one rate hike at every meeting for the rest of the year (eight hikes), yesterday’s meeting was as dovish as could have been imagined.

The primary beneficiaries of that ‘dovishness’ were exactly as one would expect: unprofitable tech – the companies most dependent on cheap liquidity and low rates.

Of course, past performance is no guarantee of future results. After all, we are talking about how many rate hikes there will be, not how many rate cuts there will be.

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