Bear market rallies do not come draped in a banner saying “this is a bear market rally, please disregard”.
Global stocks put in a pretty decent 7 per cent climb in October. But this time, it really felt like a half-hearted effort. Even those jumping aboard thought it was a bit daft. The rationale: “oddities” in chart patterns were “too much to ignore” – those who believe in the predictive power of long-term moving average prices and the like had a real treat in mid-October; bearishness had become too much of a consensus trade; and “the seeds have been sown for a sharp fall” in inflation next year.
It appears to have been expectations for a much-vaunted so-called pivot from the Fed, in which it cools, abandons or outright reverses its tough-love rate rises. , particularly while economists and asset managers fret over where the next big market accident might come from in this new tight-money era, after the spectacular UK meltdown in late September.Again with grim predictability, the Fed on Wednesday spoiled the party. It raised its benchmark interest rate by 0.75 percentage points again, as expected, and Powell did suggest further rate rises might be smaller.