The equity markets are under stress. By some measures stock prices today are lower than they were at the beginning of the year. To me, the reason for this is relatively clear. The financial system in the United States is undergoing a dramatic shift. It is going from decades of easy money at low- to no- interest rates to a period in which money is not freely available and it costs considerably more.
Some simple statistics indicate the change. In the 9-year time frame from the end of the financial crisis in 2008 to the end of last year, the average annual growth rate in the seasonally adjusted money supply (M2) was 6.0 percent. Year-to-date, the annualized growth rate has been 3.4 percent. The average Federal Funds rate from the end of the crisis year 2008 to the end of 2017 was 0.25 percent. In 2018, it has averaged 1.75 percent. It is 2.20 percent now.