The slump in the S&P 500 Index SPX, -3.37% and Nasdaq Composite Index COMP, -3.94% after their meteoric rise off mid-June lows has a lot of market commentators asking two key questions: Was that a head-fake bear market rally? Will the market retest the lows and and go lower?I argue we are in the early stages of a new bull market, which means you should buy any significant weakness, like what we see now. I don’t mean to be dismissive of the skeptics. We need them.
First, a core flaw in forecasting is the habit of assuming current conditions will persist. Second, it takes a while for declines in upstream inflation to work their way into the prices of consumer products and headline inflation data such as the consumer price index . Before we get to how long it takes, consider all the really good news on upstream inflation that’s simply being ignored, because it has not yet bled through to headline inflation.
The next big inflation report will be August’s CPI, to be released Sept. 13. It’ll show a limited impact of declining upstream inflation. A recent study by Goldman Sachs says upstream costs take two to six quarters to influence headline price measures. We are not there yet. But we’ll get lower inflation numbers that calm the bears, convincing them to turn more bullish and buy our stocks.
Reason #3: A recession is unlikely I’ll sidestep the highly politicized and silly debate about “what is a recession” since the definition has been clear for years. The National Bureau of Economic Research decides, and it considers many factors beyond GDP, including employment strength. Reason #4: Covid is on the run Covid has been wily, so no one knows if it is really receding. But so far, at least, no new Covid variants are in the wings to take over from BA.5. So many people have built up natural immunity because they got Covid, any new variant may have a hard time gaining traction.
It fell to 0.6 around near the June market lows. That’s a capitulation, suggesting investors threw in the towel and gave up — the way they typically do at market bottoms. The June reading was the lowest since March 2009, the market low in the last bear market. The bull bear ratio hit 0.56 the week of March 10, 2009, and the stock market bottomed that week, on March 11.
mbrushstocks Head fake, we should be making new 52 week lows
mbrushstocks Find out on the next episode of dragon ball Z
mbrushstocks 'Reason 3: A recession is unlikely' Wha? No matter what your thesis is, the high risk evinced by corresponding volatility day-to-day makes this recommendation extremely irresponsible and 'snake oil-ish.'
mbrushstocks Lol, get rekt
mbrushstocks 🤡
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