A key feature of the market over recent years is the constant conflicting signals about the direction of the global economy, confusing traders and making it difficult to position for ever-shifting fundamentals.
"Ultimately I believe that prices for risk assets will resolve to the upside, but that view is contingent on a Fed that signals a willingness to cut in response to a weakening economy."
Amazing how hard it is to kill this stock bull market since 2009. You wonder, what will it ever take to get stocks to crash and stay down like busts in the past? Some say lots more white collar layoffs, which could interrupt the passive 401k flows into "buy and hold total market index etf's".
I've personally got caught in a lot of "recency bias" this cycle starting in 2009 post gfc. Being a gen-xer I got out of college during the early 90's recession, which was a decent recession where it was hard to find a job and house prices went down slowly from 1990-1997. Then in my late 20's the dotcom bust was a massive wash out of course. 80% crash nasdaq & >50% S&P, and it didn't recover right away (like market did in 2020 and 2022 corrections). Then of course the GFC which was another massive bust which did not recover to break even for years.
So as a Gen-Xer I have this mental baggage of going though 3 bad recessions. But post GFC has been a very different world. 15 years now without a normal biz cycle downturn. Valuations do not matter anymore in stocks, they just get a relentless bid. Residential housing is basically in a 12 year bull market. So its a very strange world from the past. Analysts state many reasons for this new world we have all heard.... from the Fed support, more fiscal, the 401k passive index bid (which was nowhere as big in 2000 and 2008 and non existent in 1990), tech companies with higher profit margins and lower capex than companies of the past. Recessions getting shorter and rarer b/c US economy is less reliant on cyclical industries like AG & manufacturing and more service oriented. Wage increases are fueling this economy vs. consumer credit in prior cycles. Etc.....
Hey! When you say that the market is pricing-in a 75% chance of a rate cut, how is that determined? What method is used to calculate if an event is priced-in? Thanks!
"Ultimately I believe that prices for risk assets will resolve to the upside, but that view is contingent on a Fed that signals a willingness to cut in response to a weakening economy."
Amazing how hard it is to kill this stock bull market since 2009. You wonder, what will it ever take to get stocks to crash and stay down like busts in the past? Some say lots more white collar layoffs, which could interrupt the passive 401k flows into "buy and hold total market index etf's".
I've personally got caught in a lot of "recency bias" this cycle starting in 2009 post gfc. Being a gen-xer I got out of college during the early 90's recession, which was a decent recession where it was hard to find a job and house prices went down slowly from 1990-1997. Then in my late 20's the dotcom bust was a massive wash out of course. 80% crash nasdaq & >50% S&P, and it didn't recover right away (like market did in 2020 and 2022 corrections). Then of course the GFC which was another massive bust which did not recover to break even for years.
So as a Gen-Xer I have this mental baggage of going though 3 bad recessions. But post GFC has been a very different world. 15 years now without a normal biz cycle downturn. Valuations do not matter anymore in stocks, they just get a relentless bid. Residential housing is basically in a 12 year bull market. So its a very strange world from the past. Analysts state many reasons for this new world we have all heard.... from the Fed support, more fiscal, the 401k passive index bid (which was nowhere as big in 2000 and 2008 and non existent in 1990), tech companies with higher profit margins and lower capex than companies of the past. Recessions getting shorter and rarer b/c US economy is less reliant on cyclical industries like AG & manufacturing and more service oriented. Wage increases are fueling this economy vs. consumer credit in prior cycles. Etc.....
Hey! When you say that the market is pricing-in a 75% chance of a rate cut, how is that determined? What method is used to calculate if an event is priced-in? Thanks!