There are a few outliers that have particularly showed up today that causes me some concern.
- We had a slew of great data on the economic front. Record high job momentum. Possibly new spending on infrastructure. A populous looking to spend money. All of this is a positive but the market tanked over the last two days. The 10-year yields haven’t moved either which is definitely worrying. You should be very worried that they haven’t moved. What this is saying is that in lieu of rates not moving, the market has already priced in the economic boom. So there isn’t much upside left.
- Main Street boom will happen without a hitch. The market went up last year because it factored that in. If you remember 2020, people lost jobs and government fiscal and monetary policy alleviated what COULD have happened in 2021, 2022, and 2023. It was not for only 2020.
- QE was start tightening much more rapidly than you expect. A stronger stranglehold over the Fed’s purse means the cost of borrowing goes up and business expansion slows down, leading to shrinking margins for high growth stocks that have already been projected. This means that companies will not hit their estimate earnings and reduce their stock price.
The market is frothy. You all had a good ride, but there is more downward pressure on stock performance at this point. The economy will boom. We will see a mouthwatering GDP growth. But consider that the stock market is overweight on high growth tech and other bubbles. When it sells, it’ll ruin the whole bunch. This impending collapse will only correct stocks while Main Street will have their time in the Sum.
Edit: CORRECTION- The market did not tank over the last two days. However, intraday trading is hovering around ATH for the past two days with a booming economy looming on the horizon. If it hasn’t moved up since then, it’s deciding where to go. Usually ATH either go up steadily with lots of volatility or it crashes.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.