Bloomberg Intelligence's 'Equity Market Minute' 8/27/2021

Gina Martin Adams from Bloomberg Intelligence discusses the Federal Reserve's upcoming tapering of its balance sheet and its implications for the equity market. She highlights the historical relationship between stock prices and the Fed's balance sheet, noting that while tapering may introduce short-term volatility, it typically results in a slowdown in stock price appreciation rather than major disruptions. The discussion also covers how tapering affects valuations and earnings trends, emphasizing that as long as earnings rise, the stock market environment remains constructive.

What is the general trend for stock prices when the Fed's balance sheet is increasing?

• Stock prices become highly volatile.

• Stock prices tend to rise.

• Stock prices remain stable.

• Stock prices tend to decrease.

What is a reasonable expectation during tapering periods according to the first section?

• Immediate rise in stock prices.

• Emergence of volatility.

• Increased market stability.

• A complete market crash.

How have past tapering periods generally affected stock price appreciation?

• They have had no impact on stock prices.

• They have caused massive disruptions.

• They have led to a slowdown in appreciation.

• They have resulted in a rapid increase in stock prices.

What happened to valuation multiples when tapering turned to tightening in 2018?

• Valuation multiples expanded.

• Valuation multiples compressed.

• Valuation multiples remained unchanged.

• Valuation multiples became unpredictable.

What is the key factor for a constructive environment for stocks during tapering?

• Rising earnings trends.

• Stable inflation rates.

• Decreasing market volatility.

• Rising interest rates.