“Sentiment” means an attitude, thought, or judgment prompted by feeling; a refined feeling.
Late last week market sentiment quickly soured, like moving from spring to summer in just a few days; sentiment is very concerned about INFLATION and its influence on the future domestic and global economic path. It’s not about economic strength – strong consumer spending, or company sales/earnings – it’s all about how the Fed and other global central bankers will be “attacking” stressful inflation. 2022 is the year of rates – inflation and interest rates (the Fed just raised rates another 0.75% – the biggest hike in a single move since 1994). Inflation is creating demand destruction. Inflation diverts where consumers would otherwise spend. That growing concern is causing investors to rethink their attitude toward stocks and bonds. After approaching these levels in late-May, the stock market officially entered a bear market down -20% on Monday (June 13) following a short-lived bull market which ran just 22 months (from 3/23/2020 and ending on 1/3/2022).