Fed rate increase = lower hifi prices?

With 4-5% inflation without compensatory growth, that would suggest a potential for significant decline of the stock market total asset valuation

That’s just simply not true.  Using a 2022 S&P500 earnings estimate of 230 the current earnings yield is 5.5%, which leaves quite a bit of leeway for rates to rise before putting pressure on stocks (yes, I’ve done the research).  My expectation is after the dust settles we’ll head back down more to the 3% inflation range given our base rate for years has been stuck at less than 2%, but we’ll see.  

@soix

The new member (as of today) making an unatrributed reference to an “economic forecasting service” who happens to predict a worldwide depression 13 years from now seems “suspect”.

In your entire career or experience, has any reputable firm EVER made such a forecast? I don’t recall ever seeing anything like that…even doomsday cults stopped using exact dates.

That’s just simply not true.  Using a 2022 S&P500 earnings estimate of 230 the current earnings yield is 5.5%, which leaves quite a bit of leeway for rates to rise before putting pressure on stocks (yes, I’ve done the research).  My expectation is after the dust settles we’ll head back down more to the 3% inflation range given our base rate for years has been stuck at less than 2%, but we’ll see.  

Please poke as big of holes as you feel is appropriate in anything I say. I won't take it personally. Is that earnings yield not based on growth?  Since you have done the research are you able to share some simple math for discussion?

I do feel you are correct, I can't see 8 years of high inflation. Gov debt will end up debilitating as there will be matching interest rates to help keep inflation down (in theory).

In your entire career or experience, has any reputable firm EVER made such a forecast? I don’t recall ever seeing anything like that…even doomsday cults stopped using exact dates.

That sounds like something I see from people trying to get me to buy stock newsletters.

@ghasley No, and I thought it was rather absurd and useless so I didn’t even address it. In my business we had some of the best economists in the biz and I ran all manner of econometric models that generated pretty respectable numbers (high R-squared, low autocorrelation/heteroskedasticity, etc.), and I found just trying to forecast the next year to be at best a crapshoot much less 13 years out.