Bullish market drivers are winning so far. The up drivers are
1. Tidal wave of liquidity from tax cuts, money printing, lower interest rates.
2. Sentiment seems positive, money flows and flight to crap (nvec etc.).
3. The economy is showing signs of recovery. Semi btob trend is up, .97, gdp Q2 3.1 etc.
Fighting it out with negative drivers.
4. Interest rates are spiking up significantly, choking off housing, consumer debt growth.
5. Oil is very high and seems short supply. Gas in NoCal is 2.20. Petroleum is one of the main inputs to the US economy.
6. Valuations historically high, profits low. S&P p/e is 29 or 34 depending on where you look.
Looking backward, the bullish drivers are stronger. The Y2K bubble showed the strength of liquidity injections.
Conclusion We got us another mini-bubble. Bubbles can inflate for a long time. With the usual corrections, this could go thru elections, 2004. Bubbles always end badly.
The big near term question is whether the interest rate spike and oil shortage will be damaging enough to kill the bubble. Just have to wait and see, I can't call it.
1. Conservative investors would go strongly defensive and step out.
2. Nimble players would go clown long and be ready to bail fast.
3. Since 2000, the majority of my holdings have been defensive and it worked, they are still there. With the trading part a cautious bull with an eye on the door at all times.
AI
