The January 2022 edition of our US Macro Stategist explores the factors behind the ongoing stock market sell-off, and the likelihood of a lengthy correction. Given low recession risk, investors should retain a high equity exposure, but rotate away from tech as rising yields compress valuations.
After a strong 2021, US stocks have fallen near double-digits this month amid waning risk sentiment and concerns over Fed tightening. Most of the weakness is concentrated in tech, with the Nasdaq composite experiencing its weakest January in history:
In this month’s US Macro Strategist, we explore the likelihood that US stocks experience a deep and lasting correction. We believe the risk of a 2001-type adjustment is low, although rising yields and the market’s high tech weighting calls for active style rotation to maximize ‘alpha’ in the current environment.