I agree that prices for food items remains high, but as far as I’ve observed, most of those price hikes were made months ago, or all the way back in 2H2022. And more importantly, what matters to market participants and institutional investors is CPI and PPI, and the data from those reports have shown a big decrease in inflation pressures. After this month, however, the YOY comparisons will no longer be in deflation’s favor, and I believe inflation will begin to surprise to the upside. Which will in turn keep the Fed more hawkish, which will keep market participants wary, and therefore keep asset markets climbing the wall-of-worry until finally at some point in the future interest rate pressures begin to show up in the real economy. Until then, BTD.

I agree with everything except…you said ” the price of things is going down”…..have you gone the grocery store. There’s no slowdown in prices there. The price of everything, especially meat, is going up double digits. Even bread and cookies are way up. The same goes for prices at restaurants. Even McDonalds…the old dollar menu has vanished. McChicken, McDoubles, and McNuggets went from $1 to $1.50, to now 2 for $ 3.69. That’s The COLA for social security recipients is at 2.6% for next year with 3 more months to report. Give me a break.

Please listen to today’s MacroVoices with guest Darius Dale. He spells out why stocks are going up and will continue higher until recessionary data finally begins to hit the tape potentially in Q4 of this year.

https://macrovoices.podbean.com/e/macrovoices-384-darius-dale-blow-off-top-coming-before-bears-get-validated/?token=f43fbda95916dc37d024d3fa1d0913a4

Bears cling to bearish narratives despite the in-your-face evidence against it. But the fact is that valuations in many stocks have become too stretched, so a more broadening rally make sense, as the laggers catch up with the outperformers. And although the most criminal thing to ever say in the financial world is “it’s different this time,” it’s always different every time. This moment right now is unique. Some thing rhyme, but nothing is the same. And it never has been. The only thing that is the same is that everyone always gets too bearish in a downturn and it takes a very long time for the masses to become bullish. There are money managers kicking and screaming because they were not positioned for this bull market, and they refuse to believe it. Every time there’s a 2% pullback the short positioning goes through the roof. Too many participants are way too convinced by the bearish narratives. Not until everyone is on the bullish side of the boat can a bigger correction begin. More important than divergences on a chart is positioning in the market. There will likely need to be a 100% recovery from 2022 lows and then some before positioning gets “too bullish.”

The catalyst for this run is that the economy is much stronger than what was being priced in during 2022. Many traditional leading indicators suggested the likelihood of recession, but economic data has mostly troughed and is now beginning to accelerate to the upside. While at the same time, inflation has come down a lot, and therefore Fed Funds Rates do not need to keep moving higher. Also, global liquidity has been accelerating to the upside since last October, with England, Japan, and China doing some form of QE or yield curve control, and with the US lending billions to banks to quash any potential problems that were beginning to occur in regional banks. Not to mention, positioning has remained extremely bearish despite all these bullish global developments, as well as enormous amounts of cash has been on the sidelines after last years worst year ever for 60/40 portfolio.
Now we have two days in a row of lower inflation data. Yields have made massive reversals to the downside. The market is pricing in one more rate hike and done. Fed will be on pause for a long time, while jobs data continues to remain strong and wages are higher. Even with the inflation we’ve had and the higher interest rates, the public keeps spending money. We all have jobs and are paid more money than we used to be, and so we can afford higher inflation, which we don’t have to worry about because inflation is headed lower. So now we are lol working and we get paid more and yet the price of things is going down, creating a wealth effect among the general population. We are nowhere near a recession. Quite the contrary. We have entered a boom time. And that’s why stocks are going up. Wake up, y’all!

Yes! there are many theories about why this still is a Bear Market rally but if you look closely every time when there is a small retracement in SPY/QQQ, it immediately follows by sharp rally! Not to mention if you looks at the top 50 companies in the S&P500, they all have beat the earnings consistently for the past 2 quarters.

Isn’t this a characteristics of a new bull market?

AI

What is the catalyst for this run? I am sure the news will come out, may be?