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FAANG and the Fed: Trump's Rate Hike Concern Could Add to Tech Performance

Martin Baccardax

President Donald Trump's admission that he's "not thrilled" with the Federal Reserve's signalling on rate hikes could support the ongoing strength of so-called FAANG complex, which has been responsible for more than 80% of the S%P 500's year-to-date gains, as the country's biggest tech stocks race to become the trillion dollar company. The larger impact of the President's remarks, and the rare public intervention on central bank policy from the White House, might be seen in the so-called FAANG stocks, which can be sensitive to interest rate increases if they result in slowing consumer purchases of products such as Apple Inc. Bank of America Merrill Lynch, however, notes that "until investors fear the Fed there is little fear of FAANG stocks", given the fact that myriad central bank and government-led stimulus programs, including near-zero interest rates and billions in tax cuts, have only lifted 9 of the 45 MSCI country equity indices into higher year-to-date gains than can be found through risk-fee 3-month Treasury bills.