Lets start with this. With all thats been going on:
- 40+ year high inflation
- First real rate hike cycle in 40 years
- War In Ukraine
- Growth rolling over
- Record high Gas Prices
- and more
There is always an excuse to sell. I mused over the years that excuses to sell were actually a reason to buy... why? The FED has your back. Not anymore. Interest rates are breaking out of a 40+ year down trend.
Last night SNAP released earnings with no guidance. They have no idea what lies ahead. And yet the market this morning is almost green? Wild.
Its been a tough slug the last 6 months for bull and bear alike. If you took all the headlines, the rate hike expectations, the soaring inflation, and told me about it when we were at some $480 on the $SPY, I'd wonder how we aren't at $300 or less on the $SPY.
There are really two paths I see.
(1) The bottom is in. The FED is going to hike .5% and the economy is going to keep rolling over/ along with prices. Stocks have bottomed. Interest rates have topped. Inflation rolls over and the talk turns to deflation as crazy as that sound. Stocks move higher. In 2023 the S&P500 makes a new all time high. (not many see this)
(2) We have a long way to go. The bitcoin infused blow up for 3 arrow,, Celsius and the other crypto names is just the tip of the iceberg. The Bear Stearns moment. And in 3-4 months or less stocks will take the next leg lower?
That's the next shoe to drop. Higher interest rates, higher cost of capital is going to take down a lot of companies in 2022.
And yet here we are. The S&P500 is hanging in there.
What is the next shoe to drop?
The open is coming, but this will be continued