With the market ripping and the Fed about to start their victory dance, I still can't help but feel like something is amiss. I know I'll be downvoted as a dumb bear, but in the face of this current melt up is there anything that can stop it in it's tracks?
If there is a bear case to be made right now, what is it?
If there’s a Bear Market case right now, what is it?
byu/TheRealLBJ inwallstreetbets
Posted by TheRealLBJ
25 Comments
June is pride month and no one is gayer than put buyers
Nuclear war? US governmental debt coming into play at any moment?
https://preview.redd.it/kxtyx6evmx6d1.jpeg?width=2200&format=pjpg&auto=webp&s=66424b0bf6de441fd3cca1396c69a31a090eef38
The divergence between the fed balance sheet and SPX price.
Not a bear case, but AAPL, NVDA, MSFT, META, GOOGL and AMZN account for 44% of the Nasdaq.
Yeah the bears will take this market down as soon as I buy calls Monday morning
I don’t know if there’s a bear case atm for the market crashing – please bet against it so I can continue to take your money. Thank you.
I got an anecdotal one for you: never in my life did I imagine that I would make as much money as I do now, and yet I’ve never felt so broke. I spend nearly all my money affording the same “necessary” things I’ve always had to pay for: food, insurance, fuel, utilities, housing. Except after all the necessary there’s nothing left. I have no debt of any kind and lots saved up. But cash flow is net zero. It’s not like some of friends feel the same…. ALL of my friends feel the same.
Seems like we’re all just smiling while the titanic is slowly sinking.
Anyhow, I’m a bull – but that’s my bear case.
That everyone expects infinite growth on a finite planet.
Retail Sentiment is still the best counter-indicator
Wouldn’t say there is a big case to be made for the bears, but expecting choppy markets with sell offs and bulls buying the sell offs is possible since we haven’t actually experienced the extensive benefits of AI yet that Wall Street is preaching but are pricing them in like they’re a given
The market will fall eventually. But, it could rip way higher from here. The market will likely remain irrational much longer than it takes for your thesis to prove out.
The bear 🐻🌈 case begins with market fundamentals. The yield curve is still inverted. With out of control inflation, the Fed should continue raising rates. They’re not raising rates but they should.
People like Elon have been selling a lot of shares lately. They look at current valuations in the 30x earnings area and think to themselves “donkeys can only fly so high for so long.”
There’s a strong chance that the US gets into several more wars in the near future. War is good for defense contractors but bad for business in general. Expect to see a sharp decline followed by a so called patriot rally if major events are suffered by the United States.
There is a serious disconnect between the fed, market and sentiment. Ask anyone you talk to in real life; they will say we are in a recession or we are in an economic downturn. People feel broke, shit is expensive but the Ponzi scheme keeps going up
The US economy is in a precarious situation with many warning lights flashing.
First price inflation has been elevated for an extended period. It looks like prices will never return to pre-pandemic-levels. Price inflation is of course a political choice and an inexorable consequence of inflation (increase in the money supply).
This is a warning light because the natural tendency in an economy is price deflation (think 19th century America). It is not just that consumers don’t like high prices, but inflation causes misallocation of real resources and malinvestment. Finally inflation gives advantages to first users (politically connected) of new money and disadvantages regular people (later users). This is called the Cantillon Effect.
Other warning lights:
Personal savings Rate below pre pandemic levels and moving lower [https://fred.stlouisfed.org/series/PSAVERT](https://fred.stlouisfed.org/series/PSAVERT)
The Laborforce participation rate is still under pre pandemic levels: [https://fred.stlouisfed.org/series/CIVPART](https://fred.stlouisfed.org/series/CIVPART)
Consumer debt is exploding: [https://fred.stlouisfed.org/series/CCLACBM027SBOG](https://fred.stlouisfed.org/series/CCLACBM027SBOG)
Fed balance sheet never made it back to pre-2008 levels per plan (Bullard): [https://fred.stlouisfed.org/series/WALCL](https://fred.stlouisfed.org/series/WALCL)
Real disposable income is below 2015 – 2020 trendline [https://fred.stlouisfed.org/series/DSPIC96](https://fred.stlouisfed.org/series/DSPIC96)
Fed interest payments are exploding: [https://fred.stlouisfed.org/series/A091RC1Q027SBEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA)
Not until NVIDIA goes up another 3000%.
Market breadth is narrow. Look at IWM. Negative on the year. I don’t think a bear case can be made, but market is only being driven by a select few.
Look at the Buffett Indicator (market cap of Wilshire / gdp), equity markets by that measure are some of the most expensive they’ve ever been and are 2 standard deviations above the mean
*edit: Wilshire
Valuations are crazy, but the Fed’s got everyone’s backs… for now.
The market isn’t actually doing that good. Nvidia’s success and a small number of other large companies are making the overall market look good. If you cut out the top 10% of the market, the market is red and has been red for a few months. It’s typically a bad indicator. The dotcom bubble did the same thing.
This doesn’t mean we’re looking down a barrel. Nvidia could actually be worth more than it is and they keep up the growth long enough for the rest of the market to recover before Nvidia inevitably reaches a plateau.
A good argument against the bears is that we’re still recovering from the covid market. If you draw a line we’re still below where you’d expect to be if covid didn’t happen.
I see in the comments that people are forgeting that Wall Street is not Main Street.
The stock market is not the economy.
If we’re gonna go down, it’s from a shift in market sentiments from its internal reaction to trading. An overextented rally, longs getting rekt at the wrong time, a dip that doesn’t bounce right back and carries too much momentum, or some other things like that.
Even if some macros were to help the panic, it would be more like something new, like a real estate market crash. Not one of the 20 problems we’ve already had in the past 4 years, that were way worse and aren’t even as bad now.
Because I bought Calls Friday afternoon.
I think it keeps ripping. So much money on the sidelines because of interest rates. Safe money to collect 5% rather than risk the hammer to drop with all of the uncertainty currently. Once rates do drop I’d expect money to pour into the market as the free money becomes less. But I’m regarded so don’t listen to me.
Investors still waiting weak earnings reports for Mag 7, not yet enough weakness. Once mag 7 bring weak earnings or guidance market will start crashing fast.
Historically yield curves being inverted is a sign that a recession is coming and it uninverting is a sign a recession has started. People have explained this by saying people expect interest rates to come down and the Fed has a soft landing under control. Yah really never know either way.
You are not my dad !!!