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If the ‘January effect’ truly exists and those returns are prelude for the rest of the year, then investors had better put on their crash helmets and strap on their seat belts for the ride in 2022! Stocks have swooned in the first month of the year, mirroring a similar sell-off that started 2016, coincidentally also a time when the U.S. Federal Reserve started to remove the extreme monetary ease that had existed since the financial crisis in 2008. But this time around the ‘pivot’ to tighter policies has been much more aggessive as the Federal Reserve prepares to drain liquidity from the financial system to cool the inflation that its policies partially stoked, Wall Street’s pandemic-era party appears to be ending. Stocks, bonds, crypto, you name it—almost every asset class has hit a rough patch since 2022 dawned, and things could get worse before they begin to get better. The sharpest reality that seems to be setting in for investors is that the so called ‘Fed put’ (where it has rescued market sell-offs with new rounds of monetary easing) might be Ka’put’! (more…)