Giddy Market once again showed why we buy stocks. SP500 from last quarter to this 19 P/E to 22 P/E. on negative earnings. But wait the cheer! they beat the streets low expectation of MINUS 5% to MINUS 2%. At this rate i can see why we keep rising.
Why is the street giddy? because they already decided Inflation is dead, nope. Rate hikes will stop after this 25 basis point move, maybe. AND they anticipate disinflation again as the FED starts LOWERING rates all in 2023. now how likely is that? Even if it happens guess what, every single time the market dropped over 10 percent in a year. Every single time! But hey we have lived in an environment that tomorrows costs will be lower than todays. Asset bubbles everywhere. IF INFLATION is just steady for another 6 months MAJOR defaults will occur making the One trillion non-event look like Childs Play.
40 to 50% haircut in 2023. Odds favor this scenario. Like a Pandemic that not a single advisor, analyst or brokerage house saw? I mean the tsunami was known for 100 years ago and the 5 weeks till it actually caused a death in USA the market was near it's all time high! We SEE what we want and disregard the rest.
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