Animal Spirits: Will Higher Rates Kill the Stock Market
On today's show we discuss the stock market has an excuse to sell off, valuations are falling across the board, the cause of the next correction, 5% bond yields, the worst bond market of all-time, incomes are rising, the wealth effect is real, AI personal assistants, the Consumer Inertia basket of stocks, 7% mortgage rates, the fall of the creative class, the 100 best TV shows this century and…
The S&P 500 has recently been hovering near a fresh all-time high, with over 70% of its stocks trading at least 10% below their previous peaks. This has raised concerns about the impact of higher interest rates on the stock market, as evidenced by the expanding number of new lows in defensive sectors like Utilities, Staples, and Real Estate.
Despite this, consumer sentiment remains low, with inflation, mortgage rates, and oil prices all at all-time highs. While equity wealth has surged, pushing household assets above ten times liabilities in Q2 of 2026, there is still a risk that a downturn in the stock market could negatively affect consumer spending, despite the asset-liability ratio serving as a cushion.
Written by urgent.news from A Wealth of Common Sense's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
