Alpha unwind begets beta face plant?

Without the Fed's "PALM," markets are at risk from recent rotations leading to net equity selling.

I think the issue for the equity tape now is that historically, after we have had periods of significant alpha unwind from a violent sector or factor rotation (like the growth to value rotation we have been seeing for the last several weeks), we don't actually get net equity selling because the Fed is still pumping liquidity into the system allowing equities as an asset class to continually get support. As these sector/factor rotations eventually run their course, the laggards get too oversold, find a floor and then begin to play catch up to the leaders and the market resumes its upward climb, supported by the Fed’s Perpetually Accelerating Liquidity Machine (aka PALM). This has been the story for the past 10+ years.

At the risk of saying "this time is different," with the Fed now tightening financial conditions, discussing significant increases to interest rates this year and the beginning of a reduction of their bloated balance sheet, we have seen a sell-off in fixed income which has created higher yields that now has finally created some alternatives to equities as an asset class. So, when the sector/factor rotations now run their course, like it appears they are starting to do now with the sell-off in financials, early weakness in energy and small cap value topping out as short-term fixed income securities have become incredibly overbought, without the Fed supporting now, we don’t suspect the growth stock laggards will be rotated back into. Instead, we are running the risk that this alpha unwind becomes a beta face plant for equities. Trade carefully.