Over the course of several years there has been a perception among those interested in asset allocation that: Buy America's largest technology companies and they will make accumulated returns.
Those days are over, and they are now dying under the weight of central banks' rate hikes that have reformulated recommendations for investment managers along Wall Street. The term "TINA", which expresses that investors have no substitute equity, has given way to a range of actual options. From money market funds to short-term bonds and variable-rate bonds, investors are currently confined to low-risk returns that in some cases exceed 4%.
The change has been underway since the summer, but accelerated in September, as investors came up with still-inflammatory inflation data and a tight labor market that will force the Fed to reach interest rates at the highest levels since the housing crisis. After Fed Chairman Jerome Powell's remarks last Wednesday, there is little doubt that the central bank expects at least a moderate recession to curb inflation.
