In the past 2 interest rate cycle, after UST10Y peaked and went down, it came down together with S&P500 bear market.
At this current cycle, it's totally different with big divergence. UST10Y came down for more than a percent while S&P still keep breaking new high amid monetary stimulus.
A big difference here, in our new Growth Slowing End-of-Cycle, is that QE / printed money has propped up the S&P. Meanwhile, earnings slowdown haven't reared their ugly head, as we had peak growth in Q2-Q3 '18. The Bond Market is telling the FED to act even more Dovish, while the S&P is just starting to price in the slowdown. Look at AutoDesk (NASDAQ: ADSK) last week - a bang up company that fell when they reported that they're not gonna be able to keep growing because business investment is down. The next few months should show more ugly earnings, creating a highly volatile market.
But too many eyes are on this! Everyone has been calling the recession and naming the S&P or Russell Short as the biggest trade of the century. How likely is it that the FED would not print enough money to inflate S&P prices, and will instead allow the most popular trade idea to crash the US/Global economy into the Greatest Depression?!?
SafetyDance
⋅
what’s TVC?
bwalker1295
⋅
S&P 500 Will Fall after Hitting 7.500 At the Moment Liquidity will be propped up for the next two quarters and then will see a fall to the downside.
But too many eyes are on this! Everyone has been calling the recession and naming the S&P or Russell Short as the biggest trade of the century. How likely is it that the FED would not print enough money to inflate S&P prices, and will instead allow the most popular trade idea to crash the US/Global economy into the Greatest Depression?!?