“This is different from 2022”: Sell stocks when interest rates rise? ‘This’ is scarier than a bear market | Sung Sang-hyun's Macro Beyond Guest Interview with KK, Head of a Firm, Part 1
- What to look for
- Viewers can explore an approach that distinguishes the fact that interest rates are high from the reasons they rose, and see how the recipients of fiscal spending and the different liquidity channels of central banks and commercial banks change interpretations of the stock market.
- Why it matters
- This helps viewers avoid drawing firm conclusions about the direction of growth stocks from interest-rate levels alone, examine corporate earnings, inflation, productivity, and credit supply together, and distinguish expectations about policy from its actual implementation and observed effects.
AI summary
The discussion divides the current rise in long-term interest rates into geopolitics, competition for capital from AI capital investment, and fiscal spending, and considers whether its structure may differ from the inflation-driven tightening of 2022. The guest believes that if growth and liquidity hold up, some growth companies can expand their profits even with high interest rates, and that conservative positioning also carries the risk of failing to keep up with a rally. The host emphasizes that if interest rates continue rising, fewer companies may be able to withstand them and overall earnings may come under pressure, making it necessary to monitor the pace of the increase and policy responses. The discussion distinguishes fiscal support paid to individuals from support that encourages corporate investment, presenting a conditional pathway in which the latter could ease inflation through productivity gains after an initial period of cost pressure. It discusses the Federal Reserve's balance-sheet reduction alongside adjustments to policy rates, while identifying the authorities' intentions, the number of rate increases, and productivity effects as the participants' interpretations and forecasts. It also considers the possibility that declining central-bank assets could coexist with increasing private-sector liquidity through changes in banking regulation, lending, stablecoins, and other channels. Discussion of including stablecoins in monetary aggregates does not in itself mean their acceptance as collateral or unlimited money creation; investment-management assumptions should be reviewed after checking institutional arrangements, lending, and actual fund flows. All directional forecasts are the speakers' conditional judgments, not definitive predictions of short-term prices.