The argument you made is a good one. I didn't say we were going to crash, just that future expectations is demanding double digit gains. Will that happen in a slow transition period? Just look at the last quarter expectations and if they have made announcements since then. I read there is a major red flag concerning that. Money has had a net inflow this year, especially in latter half.
The move we have had is one for the record books, as is the steep almost parabolic move of late. If you are telling me all that is needed to see stocks go up is lack of alternative than why was there net cash outflows for 4 years in a row with zero rates? Sorry but that doesn't drive the market, only real tangible earnings. Even there fear took away the gamble in us. Now it is the opposite. History is against another positive year. I play the odds. With future earnings expectations for double digits increase, and a transition to higher costs, gross margins will get squeezed.
Never fall in love with a position. Don't make it personal.
I have made my macro views known on other sites for 5 years now. I expected and bet with the bull camp for a good part of that run. I called the last 2 years the "sweet spot" with low wages, low growth, high gross margin earnings. A rise in rates have always caused trouble for the equities market before. In fact with the debt load so large it will not take another 50 basis points without seeing some major defaults and restructuring. it has to be very slow from here on out. The debt burden is huge and still very tenuous.
We are awash in debt and rising rates are a BIG deal going forward. Productivity gains and great gross margins will be lower as we move ahead. the "sweet spot" is behind us.
I will stick to my assumption that we see a 20 percent correction by late October of this new year. This from a guy that has expected the current move. I let the market tell me what is going to happen. I never dismiss or excuse events or data that fall against my view. I adjust to it.
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