Bear Market Signals Triggered

In previous articles, we've reviewed the 30 risks for 2018. Now let's look at the 19 bear market signposts. As you can see from the image below, 11 of the 19 signposts have been triggered already. The first trigger is the Fed raising rates by more than 75 basis points. This cycle, the Fed has raised rates by 125 basis points, so that has been met. Since 1982, every bear market has been preceded by over 75 basis points of rate hikes. We aren't at the end of the rate hike cycle yet. The current estimate on the CME Fed Watch tool has the most likely scenario being that the Fed will raise rates twice by December 2018. There's a 75% chance rates are raised at least twice. The second most common expectation is 3 rate hikes. There's a 39.5% chance the Fed will meet its goal of at least 3 rate hikes in 2018.