Bloomberg Intelligence's 'Equity Market Minute' 2/4/2022

Gina Martin Adams discusses the market's adjustment to a tighter Fed in 2022, highlighting historical drawdowns and gains before Fed tightening cycles. She notes the significant S&P 500 correction in January and suggests the market is preparing for rapid tightening. Despite this, a 4.4% average gain is expected in the 12 months following tightening, contrasting with previous double-digit gains.

What is the expected impact of a tighter Federal Reserve policy on market returns?

• Higher returns due to increased investor confidence

• Lower returns as tightening phases often slow down market growth

• No impact on market returns

• Immediate increase in S&P 500 returns

What historical period is referenced to find a similar market correction to January's 10% drop?

• 1980s

• 2000s

• 1990s

• 1976

What does the historical data suggest about the market's adjustment to a rapid tightening cycle?

• The market is overreacting to the tightening cycle

• The market is adjusting to the likelihood of a rapid tightening cycle

• The market is adjusting slowly

• The market is not adjusting at all

What is the average gain recorded by the S&P 500 in the 12 months following the start of a tightening cycle?

• 6.5%

• 8.2%

• 4.4%

• 10.4%

How do the expected S&P 500 returns post-tightening compare to past gains?

• They are expected to be unpredictable

• They are expected to be higher than past gains

• They are expected to be similar to past gains

• They are expected to be lower than the double-digit gains seen previously