A very clear slowdown in China

A very clear slowdown.  (See China's manufacturing PMI heads south) 

Europe is (more or less) still recovering, though I would not describe it as a runaway boom. 

But the US is sliding.   Plus, China's slowdown is forcing the country to export deflation as her industry tries to survive the domestic crunch.

Quelle pagaille !  Trump's tariff tango is endangering the world economy.   The world's two largest economies are at best stagnating.  And the trends don't look good. 

[Technical note:  Most Chinese economic time series are affected by the peripatetic Chinese New Year, which can be in January or February.  The NBS (National Bureau of Statistics)  often does not publish data for January and February, or publishes an average for the two months.

Seasonally adjusting these time series is difficult.  This is complicated further by China's publishing industrial production as a year-on-year change, not as an index.  Estimating an index was made more tricky by successive Covid lockdowns.  I have found that my seasonal adjustment program was not completely removing seasonality because of these problems.  

So I have adjusted somewhat the method of calculation for Chinese IP, by seasonally adjusting my estimated IP index before and after covid separately.  In addition, I have fitted a centred 12-month moving average to the resulting time series.  By definition, a 12-month moving average contains no seasonality.  The rate of change I show is calculated from the average of my seasonally adjusted index and its 12-month centred moving average.  I hope this still leaves enough variation to detect change in business cycle trends, without being misled by spurious seasonality.] 

US uptick fizzles

 The "flash" (preliminary) estimate by S&P Global for June's PMI slid right back to December lows.   The services PMI also fell, though it remains elevated as pent-up demand from Covid lock-downs spills over into current conditions.

The longer-term leading indicators continue to point to a deep recession.  Now the short-term indicators are once again confirming this.  

US leading indices slide

In the chart below, I show my US shorter-leading index and my US diffusion index.  The shorter-leading index is made up of time series which turn just a few months before the overall economy turns.  The diffusion index shows the percentage of the measured sample of time series which is rising.  A diffusion index tends to lead the underlying economy up and down.  As long as it is above 50%, the economy is still expanding, but the higher it is above 50%, the faster the economy is expanding.

These two indicators suggest that US economic growth is slowing.  They don't say how deep the recession will be, or whether it might even just be a "soft landing".   But they confirm that a slowdown is taking place.  The rise in commodity prices and inflation suggest a "hard landing", but that is still many months away.  In the meantime,  my shorter-leading and diffusion indices confirm that the trend is definitely down, though the economy is still expanding, slowly.

New utility-scale solar up 38% yoy

From PV-Tech

The first nine months of 2021 saw US utility-scale solar additions reach 8,410MW, a 38% increase on the same time last year, according to an analysis of new government data by research organisation Sun Day Campaign.

The jump in deployment meant solar led additions, representing 44% of the total 19,022MW utility-scale generation capacity installed in the country between January and September, followed closely by wind, with 8,188MW deployed.

Renewables accounted for nearly 88% of new capacity added during the nine months, up from 64% during the same period last year, data from the Federal Energy Regulatory Commission (FERC) showed.

Solar and wind represented all of the 915MW of capacity additions in September 2021, when PV projects such as the 227MWac Muscle Shoals plant in Alabama were connected to the grid.

The latest additions mean solar represents more than 5% of the US’s installed utility-scale generating capacity, up from 0.14% in September 2011.

The FERC update only includes data for utility-scale facilities and does not reflect the capacity of rooftop solar, which, if added, would take solar’s total capacity up to above 7% of the nation’s generating capacity, according to Sun Day Campaign.

The 227MWac Muscle Shoals project in Alabama went online in September. Image: Ørsted.

Peabody's massive write-down

 From IEEFA

Peabody Energy, the world’s largest privately owned coal company and the biggest U.S. coal producer, has finally acknowledged a long-apparent reality: Thermal coal mines in the U.S. have little value anymore and not much of a future.

The company said as much this week when it slashed the book value of the largest coal mine in the country—the North Antelope Rochelle mine in Wyoming’s Powder River Basin—by $1.42 billion, or 22% of Peabody’s total asset value.

When Peabody emerged from bankruptcy three years ago after having discarded $5 billion of its unsustainable $10.1 billion debt load, CEO Glenn Kellow said the company was “well positioned to create substantial value for shareholders and other stakeholders over time,” and that Peabody had “taken significant steps to create a capital structure to succeed through all cycles.”

On its first full day of trading after that—on April 4, 2017—Peabody’s stock price closed at $27.25. After the company’s most recent earnings release on Aug. 5, the stock closed at $2.90, a drop of almost 90% after the company’s supposed comeback.

Peabody’s North Antelope Rochelle write-down is simply a reflection of the new reality in U.S. coal-mining that has been evident almost since the moment the company came out of bankruptcy. The industry continues to be battered by rapid structural decline driven by low gas prices, the low and falling cost of building wind and solar power generation, and sweeping initiatives by utilities and corporations to cut emissions.

Demand for coal is in free fall.  U.S. utilities consumed 637 million tons of thermal coal, and an additional 54 million tons were exported. This year, utilities are likely to reduce their consumption to 377 million tons, a 41% decrease over two years, while exports of thermal coal may fall to 25 million tons, a 50% drop over the same period, according to the latest short-term forecast from the Energy Information Administration.

Coal company bankruptcies more recent than Peabody’s, including Westmoreland Coal, Cloud Peak Energy and Blackjewel, have all drawn little investor interest, with mine values approaching zero, and in some cases, essentially negative asset valuations because of the significant payouts needed to coax financially weak buyers to take on huge cleanup liabilities.

[Read more here]

It's no longer those pesky environmentalists who are conducting a "war against coal".  It's economics.  Renewables are far cheaper than new coal, not just in the USA,  but in most of the rest of the world too.  Gas in the USA is cheaper than coal thanks to the fracking revolution, though that may not last.  In many locations, new-build renewables are cheaper than the operating cost of coal.  Battery storage costs are plunging.  Unless they are subsidised (as in China), no rational investor will build a new coal power station, and many will want to shutter existing coal power stations.  And because the costs of wind, solar and storage are falling each year, this will only get worse.

Coal power set for record fall in 2019

From another of CarbonBrief's in-depth analyses. 

Global electricity production from coal is on track to fall by around 3% in 2019, the largest drop on record.

This would amount to a reduction of around 300 terawatt hours (TWh), more than the combined total output from coal in Germany, Spain and the UK last year.

The analysis is based on monthly electricity sector data from around the world for the first seven to 10 months of the year, depending on data availability in each country.

The projected record is due to… 

• Record falls in developed countries, including Germany, the EU overall and South Korea, which are not being matched by increases elsewhere. The largest reduction is taking place in the US, as several large coal-fired power plants close.

• A sharp turnaround in India, where coal power output is on track to fall for the first time in at least three decades.

• A flattening of generation growth in China.

The main counteracting force is from continuing increases in coal generation in south-east Asia, but demand from these countries is still small relative to the global total.

The global decline means an economic hit for coal plants due to reduced average running hours, which are set to reach an all-time low.

The record drop also raises the prospect of slowing global CO2 emissions growth in 2019. Nevertheless, global coal use and emissions remain far higher than the level required to meet the goals of the Paris Agreement.

2009 fall due to GFC (global financial crisis), 2015 to China slowdown.
Source: Carbon Brief

China

In China, electricity demand growth has slowed to 3% this year, down from 6.7% over the past two years. Non-fossil energy sources have met almost all this demand growth.

The country’s demand for coal-fired power depends on the interplay between clean electricity growth and rising demand. The gap between the two, if any, is filled with coal.

This means that when electricity demand is growing strongly, coal dependence comes to the fore. With these conditions, 2017-2018 saw coal-fired power generation grow at an average of 6.6% year on year.

However, 2019 has so far seen strong nuclear, wind and hydro power generation and relatively weak overall electricity demand growth, with coal use in electricity flatlining.

At the same time, Chinese power firms have been continuing to add new coal-fired power plants to the grid at a rate of one large plant every two weeks. This has driven coal-fired power plant utilisation rates – the share of hours in the year when they are running – back down to record lows of 48.6%. This is the fourth year in a row that the Chinese national average has been below 50% – and also below the global average, which stands at 54%.

2019 has also seen the first contracts for wind and solar plants that will generate power at the same price as coal power plants, putting China on a path to renewable energy “grid parity” as those projects come online in 2020.

[I fear that the slowdown in growth in coal power generation in China is mostly due to slow economic growth, and as China recovers, its coal burning will continue.  That is prob'ly why the thermal coal price  is once again rising]

US

The US is on track this year for one of its largest annual declines in coal-fired power generation. Year-to-date August 2019, coal-fired power is down 13.9% compared with the same period in 2018. The month of August 2019 saw coal-fired power generation down 18.2% year-on-year.

Coal unit retirements have continued this year at near record rates. Year-to-date data shows 57 units, with a capacity of 14.0 gigawatts (GW), that are all retiring in 2019 – some 5.8% of the US coal fleet. This compares with 15.5GW (6.0%) of retirements in 2018.

India

Electricity demand growth in India has continued to slow dramatically across the first ten months of 2019. In October, electricity demand actually fell by 13.2% against the same month last year.

Collectively, power from all non-coal sources grew by about 12% in January-September, leading to a downturn in coal-fired generation that is accelerating sharply. Coal-fired generation in October fell by 19% year-on-year to the lowest level since 2014. 

Heavy monsoon rains have affected industrial power demand, but as demand has continued to plummet in November, a broad slowdown in industrial output is becoming increasingly apparent. This suggests that the country’s CO2 emissions growth is slowing further from the already low annual rate of 2%, which we estimated from data for the first half of 2019.

The average thermal power plant utilisation rate in India is below 58%, meaning substantial idle coal capacity.

EU

The European Union has experienced an unprecedented 19% year-on-year decline in coal-fired power generation in the first half of calendar year 2019. This is accelerating in the second half of the year to an estimated 23% fall in 2019. Around half the fall in coal reflects the impact of new wind and solar. The other half is due to a switch from coal to gas.

The coal-gas switch has happened as the carbon price in the EU Emissions Trading System rose above €20 per tonne of CO2 and gas prices fell, pushing gas generation to be cheaper than coal throughout 2019.

Because very few new gas plants are being built in Europe, further coal-gas switching will be constrained in subsequent years. The expansion of wind and solar is increasing, however, and this will be the driving factor displacing not only coal generation, but also output from gas in the future, as long as demand growth remains tepid or negative.

All western European countries have seen big percentage falls of coal use – from 22% year-on-year in Germany to 79% in Ireland – in the first half of 2019.

There were times of zero or near-zero coal generation in many western European countries. For example, coal has been less than 2% of the electricity mix in Ireland, France and the UK, and only 6% in Spain and Italy, across the first half of 2019. The UK had two weeks in May with all its coal plants switched off for the first time since the Industrial Revolution began. 

Germany has seen by far the biggest cut in coal generation in absolute terms, with both hard coal and lignite falling substantially.

[Read the full article here]

It was always likely that a pincer movement would decimate coal.  On the one hand, the public's awareness of the climate emergency (and therefore politicians' willingness to act) was likely to rise inexorably as the world warmed.  Record droughts, floods, heatwaves and bushfires have seared themselves into our memory.  We know that the world is getting too hot, whatever the soothing lies from denialists.  

Simultaneously, the costs of wind, solar and storage are plunging.  10 years ago, in the USA, electricity generated by solar cost 3 times per MWh the cost of electricity generated by (new) coal power stations.  Now it costs 1/3rd.  In Los Angeles, recently, a contract was signed to provide "near firm" electricity from solar at less than the cost of a new gas plant and about the same as the operating cost of coal.  At that point it stops being economically rational to keep coal power stations going.  And with rising awareness of global heating, the political pressure to replace coal with renewables is only going to intensify.  The huge financial risk for any developer of a new coal power station, or a new coal mine, is that they will be stranded assets, unable to pay back the loans they used to get built.

US flirting with recession

June's PMI (interim estimates) fell again, for both services and manufacturing.  The manufacturing PMI is the lowest it's been since the GFC (global financial crisis), and now is only just above the 50% "recession line", i.e., the point at which 50% of respondents see output/sales/employment, etc, as falling.

 The average of the services and the manufacturing PMIs isn't quite so weak, but then services are less cyclical than manufacturing, and lag behind manufacturing in the cycle.  All the same, it's not far off 50% either.

I first forecast a 2019 US recession in June 2017, at my last presentation to our authorised reps before I retired.  I based that on my longer-leading index which was falling fast.  That has now stopped falling, and may have begun to rise.  Certainly, a Fed rate cut would cause it to start rising.  However, the lags are long (12- 24 months) so it's unlikely that the US recession will end before mid 2020, even if the Fed cuts rates now.  And that's before we get into trade wars, real wars, and the rapid fading of the Trump tax-cut sugar hit from last year.

Incidentally, the PMI survey results are consistent with the sharpest fall ever in the Fed's Empire State survey, and one of the top ten sharpest falls for the Philly Fed survey (it has a longer survey history).  Their little rebound over the last coupla months is well and truly over.

I'll be updated my short- and longer-leading US indices soon, but I need to do some work on a couple of their components first.  Give me a week or so.  After all, I am retired, and am still not 100% well after my recent illness.

How much renewables do we have now?

I'm a data junkie.  I want to know the facts.  Whereas with economic data I have excellent resources, with data about renewables, the facts I can find are often contradictory.  So in an earlier post this week, according to the Danish Energy Dept, renewables (including biomass) contributed 56% to Denmark's electricity generation.  According to the chart below (from the Finkel Review into Oz's electricity market) Denmark is at 51% VRE (wind + solar), but you have to add biomass (about 11%) to that.  The IEA's estimates for the current situation can probably be trusted, though their forecasts have been serially (and seriously) wrong for several years now.  They have consistently underestimated the decline in the costs of wind and solar and therefore they have also completely missed the rise in deployment of wind and solar.  My guess is that the forecasts for renewables for 2021 are again too low, though they are (now!) forecasting a doubling of the renewables percentage in the USA and China over the next 5 years.  They are assuredly too low if we want to slow global warming.

(Source)

Grab

Silhouette man

Trump wins

---By Paul Noth

40 years on

About 40 years ago--in 1978, I think--I was listening to a program on the radio about global warming, The program was on Woman's World on the SABC, and if I left work early enough I used to make a point of listening to it.  It was always interesting and even though it often discussed complicated and difficult topics it never talked down to its listeners.

At the end of the program the interviewer asked the scientist what we could do about the global warming he'd just warned us about.  His answer was very gloomy: every economic activity we did used fossil fuels, from switching on the light to growing our food.  You could almost hear the shrug.  And I remember thinking cynically, oh well, no one is going to do anything about it, then, are they?  No one is going to take a cut in living standards to prevent a future catastrophe.  And they didn't.  Since then, atmospheric CO2 has risen from around 330 ppm to over 400--and the trend is visibly accelerating.  Since then, global temperatures have risen 1 degree centigrade.  And again, to my untutored eye, the rate of increase in recent years has accelerated.

Yet, at about that time, some of the solutions to our fossil fuel dilemma began to be developed.  In Denmark, the first commercial wind turbine was built--and it's still operating, 40 years later.  It was built by volunteers with donated parts.  It's much less efficient than modern turbines. Its capacity factor (the amount of power it generates over a year compared to its nameplate or nominal capacity) was around 7%.  These days Danish wind turbines have capacity factors of 30%.  Today 45% of Denmark's electricity comes from wind.

And then, the first commercial solar panel was created.  It cost US$76,700 per kW in 1977. It would have cost  $384,000 to put 5 kW of solar panels on your roof, ignoring the costs of the transformer and the electrician.  Now, in Australia, you can put 5 kW on your roof for US$4000.  All inclusive.  Industrial scale solar has fallen even faster in cost than rooftop.

How did this happen?

It's called a "learning curve".  Hardly anyone could afford the first solar panels, but there were some uses.  Remote telephone substations.  Calculators.  (Remember those calculators with tiny solar panels which didn't need to be be plugged in because they charged themselves from the ambient light?)  Well, as sales increased, the costs fell, which led to further sales increases, and further cost declines.  The chart below shows how this process worked with the model-T Ford.   Now notice that this is a double-log scale.  Both the horizontal and verticals axes are logarithmic,  Every time cumulative sales rose 10-fold, the cost of the model-T fell a bit more than 25%.  Between 1909 and 1923 cumulative production rose from 10,000 to 10 million.  And the price, in real terms, fell from $3500 to $950. (Click on the chart to get a more readable version)

This is what happened and is still happening with wind and solar.  So solar costs have fallen from $76.70 per watt to under 50 cents.  And wind has fallen roughly 8 fold since the early 80s.  This isn't just more efficient manufacturing.  It's individuals and systems (including companies) learning how to do better.

So renewables started out much, much more expensive than fossil fuels,  After all, fossil fuels moved down their learning curve a century ago.  But two or three years ago, the cost declines in solar and wind finally reduced costs to below new fossil fuel plants.  Old generating plants are cheap because they're fully depreciated.  But they're also, by definition, old.  Which means they will have to be retired at some point.

So rapid and extensive have the cost declines been that in a middle-ranking developing economy like South Africa, wind and PV are now nearly half the cost of new coal.  And that's true in most places right around the world.  And the cost declines aren't over.  Wind is expected to fall another 24-30% by 2030 and 35-41% by 2050.  And wind is already cheaper than coal.  Solar is likely to fall 90% by 2030.  And solar (except near the poles) is already as cheap as or cheaper than coal.  Meanwhile, the costs of storage are also falling dramatically; not just battery storage but also concentrated solar power with molten salt storage (CSP).

Something else started in 1978: explosive growth in China.  In 1978, China was just 1% of the world economy.  Now it's closer to 20%.  Chinese stats are getting better but they're not exactly 100% accurate, so we're not 100% certain just how big it is.  But it's BIG.  For example, it's the largest consumer of raw materials in the world, and also the world's largest emitter of CO2.  It produces half the world's coal, and still needs to buy more.  China has contributed mightily to the rise in global atmospheric CO2.  And up until a few years ago, you could have complained that no matter what we did about reducing CO2 emissions, it would make no difference, because China's were exploding.

But that's changed.  China is the world's largest installer of wind and solar:

• China installs more than one wind turbine every hour.
• Generation from wind and solar rose by more than total electricity demand in 2015 (admittedly a low industrial growth year)
• Half of all wind and a third of all solar new capacity globally was added in China.  And China now has 19% of total solar and 34% of total wind capacity in the world,

China also heavily subsidises electric car sales.  EV sales have doubled over the last year.  This is up from nothing 5 years ago.  The world's biggest electric car company is not, as you might expect, Tesla.  It's the Chinese company BYD, which is also the world's biggest electric bus manufacturer.

In 2009 at Copenhagen, the Chinese scuttled the climate change talks.  This time they were big supporters of the Paris talks.  So why the change of heart?  

1. In 2009 renewables were still much more expensive than coal.  Now they're not, and they're getting cheaper every year.  (That's why everyone is now much more comfortable supporting renewables.  The Paris agreement didn't happen in a vacuum)
2. Chinese air pollution is horrendous. It can even be seen from space.  4000 people a day die from it.  That's the equivalent of 10 jumbo jets (Boeing 747s) crashing every single day.
3. China sees a market opportunity.  Among the top 10 wind turbine and solar PV manufacturers, 5 in each listing are Chinese.  And the growth of EVs means that new Chinese manufacturers have a chance to seize market share, 'cos the existing car heavies are still not moving fast enough to switch their businesses from petrol-driven cars to electric ones.  There's a learning curve in EVs too.  Tesla and BYD are today's Ford.
4. It provides energy security.  How could the US, for example, stop the sun shining or the wind blowing?  And just imagine not having to import oil from unstable geo-political regions.  Having your own wind turbines, your own solar panels, your own electric cars and busses means that you are energy independent.
5. And, last but not necessarily least, China knows perfectly well that global warming is happening.  The effects of drought and floods and of rising sea levels on cities like Shanghai and Shenzhen are, I think, well understood by Chinese officials.  They have no grumpy oil-soaked plutocrats to fund denialist websites.  They are not afraid of collective action to achieve goals.  They have no Republican Party.

So what I see now, 40 years after I first heard about global warming, is that we have started an inexorable and irresistible shift towards a green energy system.  This shift is now being driven  not just by steady and sustained declines in the costs of renewables but also by public policy, because no one (except the venal or the demented) can deny that global temps are rising too fast for comfort.  And public policy is likely to get tighter and become more insistent and aggressive as global temps keep on rising.  Despite the denialists, the coal and oil barons seeking so hard to obfuscate the truth and to delay the switch, the vested fossil fuel and generating interests, the inertia and fear of change, the change will happen anyway.  

That scientist from 1978 would be wrong if he were to say today that we use fossil fuels for virtually every economic activity we undertake.  We don't, and every year that goes by we'll use less.  One day, we won't use any.

Truthiness

(source)

All the kings horses and all the king's men

From an intriguing article in Rolling Stone.

Texas is a wind power giant

It seems odd that the greatest oil state should be such a US wind power giant.  Yet, because the wind blows steadily and strongly across the state, the potential is there, and is being realised.

(Source)

1. Texas was the first state to reach 10,000 MW of wind capacity.  Last year total capacity reached nearly 18,000 MW.
2. Texas has received the most investment in wind of any US state--US$32.7 billion, and employs the most workers in wind too (24,000)
3. Wind now supplies 10% of total electricity generated (compared with 35% from all green sources in Germany).  On some occasions wind supplies 40%.
4. Wind is now the cheapest source of energy in Texas:  An analysis by Lazard, LLC found that the cost of wind production in Texas averages between $36–51 per megawatt-hour (MWh), not including government subsidies.  Coal costs, on the other hand, range from $65–150 per MWh and gas from $52–218 per MWh. Bloomberg New Energy also reported that wind energy is cheaper than fossil fuels, citing the levelized cost of energy from wind in Iowa and Texas is lower than the levelized cost of coal at $59 per MWh – again, without subsidies.

((Read more here.)

What this implies is that the percentage of wind in the total power mix in Texas is going to keep on rising.  Wind power is no longer being installed just because we want to reduce carbon emissions.  Now it's also cheaper than the fossil fuel alternatives.  This makes the pressure to switch compelling. 

How will  the Texas grid deal with the fact that even in Texas, the wind doesn't blow all the time?  

Well, for a start, utilities are already using gas-fired peaking power plants, and that's likely to continue until storage is cheap enough to price them out of the market.

The cost of battery storage is in fact plummeting.  But at this stage it's still too expensive to provide days of storage for the whole grid.  It will be cheap enough to provide enough storage (3 to 4 hours' worth) for the evening ramp up. 

Texas also has strong solar resources.  The Tesla Solar City merger is about  Tesla doing for solar panels what it's doing for EVs.  One of the reasons rooftop solar costs so much more in the US than it does here in Oz is the cost of gaining a client.  Tesla intends to slash that cost.   I expect that the uptake of rooftop solar is going to pick up sharply.   And given that it's Tesla, it will be combined with behind-the-meter storage.

The cost of CSP (concentrated solar power) is falling fast.  CSP can deliver power 24/7.

The Texas grid system will need more links with the Eastern Interconnection, the grid which covers all the states east of the Rockies.  The truth is that the wind is always blowing somewhere, and wind farms which are far enough apart can produce baseload power.  When the wind's blowing hard in Texas, it'll sell its surplus power to the east, and vice versa.  Germany copes with its 35% renewable component because of its extensive links to the European grid.  It exports power to France when it has a surplus, and imports from Norway's dams when it is short.

There are states in the US which oppose a switch to renewables.  The slide in the costs of wind, solar and CSP makes this an increasingly quixotic venture.  And anyway, if California (the world's sixth largest economy), Texas (the world's 11th), New York State (the world's 12th) , and the wind-belt states switch, the nation-wide switch to renewables will accelerate.

Trump & the GOP establishment

Cartoon by Ed Wilson

US Presidential Candidates

Note:  no Sanders on the list!

Q1 new generating capacity in the US

This year 90% of new generating capacity so far installed has been green.  Only 10% has been in fossil fuels (gas).

Ted Cruz and Global Warming

A denialist in full cry.  Makes one want to weep.

When good is bad

US employment data for February continued the strengthening trend of the last year, despite incredibly cold weather over much of the eastern US and incredibly warm weather/drought over the rest of the country.  The highest increase in a decade, if you ignore the short-lived spike when the US Federal Government hired a couple of hundred thousand temporary workers to take the ten-year census in 2010.

The US share market fell. But hang on, surely if times are good and getting better, surely the market should have gone up?  Well, no.  Because the stockmarket is a resultant (thinking of vector algebra here) of earnings, confidence and interest rates.  And this strength in employment suggests that interest rates in the US will start to rise soon.  For 6 years, the central bank discount rate (the "Fed Funds" rate) has been near zero, as the Fed tried to get economic growth going again after the GFC.  And a rule of thumb is that a "neutral" discount rate/cash rate should be roughly equal to nominal GDP growth,  which in the US over the last year has been around 4% per annum.  A stimulatory rate would be below nominal GDP growth, a contractionary rate above it.  After strong stimulus, it is now necessary to raise interest rates to prevent future asset price bubbles and rising inflation. What these strong data suggested was that the probability of that happening has risen.

Now, it may happen that interest rates can rise (slowly!) but earnings may rise too, in which case the stockmarket will go sideways or even up.  This often happens in the middle of an economic recovery.  But later on in the recovery, earnings growth becomes harder to achieve, and the annual increases in profits slip.   If interest rates start rising then, PE compression ( a falling price-earnings ratio) overwhelms the rise in earnings, and the market falls. In addition, in the case of the US share market, a big chunk (25%, 30%?) of profits are generated abroad (think of all the multinationals which dominate the Dow and the S&P)   And since the US is so out of phase with the rest of the world, where interest rates won't be rising any time soon, the US$ is soaring, reducing foreign profits when they are converted to US$.  The market isn't going to be rescued by a rise in earnings.

So this may mark the peak in the current bull market run in the US.   I don't think the fall will be substantial, but I do believe it will qualify as a "bear market", traditionally 20% or more.