Collapsing banks, Reits hint at trouble ahead

AN old fund manager friend told me in October last year that it was probably time to load up on stocks.

The US Federal Reserve was hiking rates at a torrid pace of 75 basis points each time. Yields on 10-year US Treasury bonds had pushed above 4 per cent. And, the S&P 500 Index had closed as low as 3,577.03 on Oct 12, 2022.

My inner bear demurred. It seemed unlikely to me that inflation could be quelled without a deep slump in economic activity and corporate profitability, which was not yet apparent. Also, I feared pockets of excesses built up during the long period of ultra-low interest rates might unwind in a disorderly manner amid the rapid tightening of monetary policy.