{"id":199254,"date":"2010-01-19T08:29:00","date_gmt":"2010-01-19T13:29:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/ubs-lets-hope-this-time-its-different-because-rate-hike-cycles-usually-kill-stocks-2010-1"},"modified":"2010-01-19T08:29:00","modified_gmt":"2010-01-19T13:29:00","slug":"ubs-you-better-hope-this-time-its-different-because-the-rate-hike-cycle-is-a-market-killer","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/199254","title":{"rendered":"UBS: You Better Hope &#8216;This Time It&#8217;s Different&#8217;, Because The Rate-Hike Cycle Is A Market Killer"},"content":{"rendered":"<div style=\"float: left; padding: 15px 15px 15px 0;\">\n<script type=\"text\/javascript\">\/\/ <![CDATA[\ntweetmeme_source = 'moneygame'; tweetmeme_service = 'bit.ly';\n\/\/ ]]><\/script><br \/>\n<script src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\" type=\"text\/javascript\"><\/script>\n<\/div>\n<p>UBS&#8217;s latest global equity strategy pieces look at history and asks &#8216;What do rate hikes mean for equities?&#8217;. Unfortunately the answer isn&#8217;t pretty. Average stock market returns have been far worse after interest rates start to rise, when compared with the 12-month period before the rate tightening cycle begins.<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/image\/4b55b01f0000000000d5404c\/chart.png\" border=\"0\" alt=\"Chart\" \/><\/p>\n<p>Though 2004 was a bit of an exception &#8212; stocks continues to do quite well even after rates started to rise:<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/image\/4b55b04f000000000070fe7b\/chart.png\" border=\"0\" alt=\"Chart\" \/><\/p>\n<p>So there is hope, according to UBS, if indeed we live in historically abnormal times.&nbsp;<\/p>\n<p style=\"padding-left: 30px;\"><span style=\"text-decoration: underline;\">UBS:<\/span> Positioning for upside. Policy tightening, along with other factors, is likely to keep market uncertainty high leading to a year of choppy returns. We recommend investors &lsquo;trade up&rsquo; in quality as the junk rally gives way and companies with better fundamentals outperform. In global strategy we recommend a more balanced tilt between cyclicals and defensives than in 2009. This is shared by our strategists in both Europe and Asia who recently reduced their cyclical sector positioning, whereas our US and Canadian strategy teams prefer to stay more cyclically positioned for now.<\/p>\n<p>Also, we&#8217;d like to add that the other issue is whether the Fed will even start raising rates any time soon. Note that Goldman thinks it won&#8217;t happen <a href=\"http:\/\/www.businessinsider.com\/goldmans-giant-call-interest-rates-will-be-ultra-low-until-2012-2009-12\"><em>until 2012<\/em><\/a>.<\/p>\n<p><em>(Via UBS, Global I\/O: Equity Strategy, Jeffrey Palma, 18 January 2010)<\/em><\/p>\n<p><em>Add my twitter: @vincefernando<br \/><\/em><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/ubs-lets-hope-this-time-its-different-because-rate-hike-cycles-usually-kill-stocks-2010-1#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/pimco-fed-tightening-is-impossible-without-2010-1\">PIMCO: There&#8217;s No Way The Market Can Absorb The Fed&#8217;s Giant Balance Sheet Once It&#8217;s Time To Tighten<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/the-warning-shot-fed-tells-banks-they-need-to-worry-about-interest-rates-2010-1\">THE WARNING SHOT: Fed Tells Banks They Need To Worry About Interest Rates<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/china-battles-bubble-fears-by-forcing-bill-yields-ahead-of-expectations-2010-1\">Panicky China Raises Interest Rates Higher Than Expected To Battle Bubble Fears<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/fa3uOwOH3ZA\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>UBS&#8217;s latest global equity strategy pieces look at history and asks &#8216;What do rate hikes mean for equities?&#8217;. Unfortunately the answer isn&#8217;t pretty. Average stock market returns have been far worse after interest rates start to rise, when compared with the 12-month period before the rate tightening cycle begins. Though 2004 was a bit of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-199254","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/199254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=199254"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/199254\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=199254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=199254"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=199254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}