Stocks rose last week due to oversold conditions being reversed and Ukraine making progress in its war against Russia.
www.ft.com/content/e9b7245c-7e5a-46d0-9097-c4276136fb21
While it is perhaps too early to declare the all clear on the war,
twitter.com/RobinBrooksIIF/status/1569252284047020035
many traders have turned optimistic about near-term market action. Among the reasons cited are that
1) headline inflation is falling,
2) bond yields may have topped out,
3) the war in Ukraine may end in the next six months,
4) the European recession may not prove as bad as feared thanks to fiscal support,
5) investors are pessimistic,
6) the $SPX500 found technical support at 3900,
7) the Fed’s hawkishness is already well-known,
8) it is difficult to come up with reasons that would make investors to sell.
Thus, the market should continue to frustrate bears.
We have sympathy for this view in the near term, but remain cautious about the next 12 months because the valuation of the market is unattractive, the inflation problem is not solved, and economic momentum remains negative.
It could well be, though, that we will have to wait until 2023 for the next major down leg to occur, as it is only then that the Fed’s interest rate hikes will weaken the economy sufficiently to raise the unemployment rate. For now, everybody has a job and they are happy to speculate, which makes it difficult for the market to fall too much.
𝟮𝟬𝟮𝟮 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗬𝗧𝗗
@triangulacapital -5.5%
$SWDA.L -15.9%
𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀 None.
