11/3/21: Are we in a Stock Market Bubble? Is it like the Internet Bubble? 1987 Black Monday crash possible?
Things are looking very similar to the internet bubble. Many of the bubble stocks, like SPACs, will not survive.
12/16/21: Inflation Inflection. Inflation will drive the inflection change for value to outperform growth.
• Value will begin to outperform growth on a sustained basis with inflation on the rise and valuations stretched for growth stocks.
1/21/22: 7 Reasons to Raise Cash
• We expect a 20-30% correction in the SPX, and a 30-50% correction in the IXIC.
2/1/22: Déjà Vu, Bubble Two ?? Nothing New, Popping Too ?? The year 2021 or is it 2000?
• Speculative bubbles caused by stocks with low revenues, negative cash flows, but multibillion $ capitalizations. Spurred on by an IPO Frenzy in 2000, today its SPACs. Bubble is popping.
2/10/22: Higher Long Term Rates, Tapering, and the Fed raising Short Term Rates Negative Impact on Stocks.
• As QT begins and QE ends, rates will move towards market based pricing of at least 5% yield. Higher interest rates lower the PE ratios.
3/14/22: Stay Cautious.
• Recession is 50/50 chance. If a recession happens, stocks will have a bear market of at least a 20% pullback, we are only down 11.5% since January. Stay cautious and keep lots of cash.
4/24/22: Quantitative Tightening set to Begin. Stay Cautious. Fed set to raise short rates aggressively.
• The fed is looking at 50-75 bps hikes however, the Fed is still accommodative since rates are below inflation. QT is expected to begin next week with the Fed starting at $47.5 billion a month of Balance Sheet reduction. Stay Cautious.
5/22/22: QT (Quantitative Tightening) starts next month. Liquidity exiting system is negative for stocks.
• QT has only just begun. Fed has only done 50bps of hikes. This is just the beginning for QT and rate hikes. We expect QT to kick in and interest rates to go up to at least 5% on the long end. Fed will blink before it controls inflation.
7/23/22: Quantitative Tightening (QT) Starts Slowly Allowing Markets to Rebound.
• The planned QT of $47.5 billion a month starting June 1 did not occur June. This lack of liquidity withdrawal, lack of QT, has allowed the markets to rebound. If QT is implemented on schedule, with $95 billion a month of QT starting is September, markets will most likely head lower.
8/10/22: CPI up 8.5% Driven by Quantitative Easing over 14 Years. Fed Balance Sheet up 11 X to $8.9 Trillion.
• CPI too hot at 8.5%. Inflation is not transitory and will be difficult to rein in. QE from $800 billion to $8.9 trillion is causing inflation.
8/31/22: Quantitative Tightening, QT, doubles to $95 billion per month in September. Negative for markets.
• QT to accelerate $95 billion per month. This is likely to drive interest rates up and drive the stock market down. Keep a very close eye on what the fed is doing with the balance sheet. Stay cautious as stock market likely to test or break the lows.
9/20/22: CPI Core Too Hot, Rates Going Up, Quantitative Tightening (QT) Still Sluggish, Stay Cautious.
• CPI still too hot. Fed will raise to by 75 bps to 3.00-3.25%. Core inflation month over month 0.6% annualized at 7.2%.