Another outstanding read Dillon. Really appreciate the effort you go to. You have such a talent for communicating on the markets that makes things so easy to understand and digest. Keep it up and thanks for your hard work. Be interesting to see how things play out next week and for rest of 2023 going forward.
The bear market started nearly 2 years ago, in February 2021 in the most speculative stocks. Since then, one market over the next began to crumble. It started in innovation, then crypto, then growth stocks, then tech, and eventually spread everywhere. It’s not that they’re wrong calling for 4-2, they’re just late as valuations in many non-index stocks collapsed.
I believe they’re missing the full picture because they’re looking to the right of the equation, not the left and they are not analyzing the full story and all the information
Thanks for your reply. I think similar, is just lots of noise in regards of screaming recession lately...which I keep saying we are already on it since end of last year. Now, with the inflation staying high for longer (which I think is the case) FED will need to keep raising or keep rates higher...does this change your thesis at all?
Not necessarily because I look at it like the Fed slowing a car down from it going too fast. The monetary and fiscal stimulus was tremendous in 2020 & 2021. The economy is weakening and will continue to weaken but thinking about the relationship between unemployment and inflation declining… It’s just simply bullish.
If we think ahead, we know inflation will continue to abate. The Fed has room to keep fighting this fight till it’s done especially since unemployment remains durable. If unemployment starts to crack, we will see considerable deflation.
Every day that passes where we don’t collapse is another day for the bulls.
Dillon - thanks for a great write up. You note in reference to S&P that with earnings growth, a P/E 18x gets us to 4500, a nice growth from current levels. What makes you choose 18x when the historic mean is a hair under 16, which indicated just under where we are today?
Hey Cpink- there was no reason why I chose 18 other than it appeared that’s where we are trading right now. If we used 16x as a forward P/E we’d get S&P 4000 @ $250 earnings. So much is dependent on this years earnings and 2024’s earnings.
Another outstanding read Dillon. Really appreciate the effort you go to. You have such a talent for communicating on the markets that makes things so easy to understand and digest. Keep it up and thanks for your hard work. Be interesting to see how things play out next week and for rest of 2023 going forward.
Great level of detail, and thanks for all your hardword.
Thank you my friend 👊🏼
Thanks for sharing, what are your thoughts with many others calling it a 4-2 instead? what do you think is what others are missing? thanks in advance
The bear market started nearly 2 years ago, in February 2021 in the most speculative stocks. Since then, one market over the next began to crumble. It started in innovation, then crypto, then growth stocks, then tech, and eventually spread everywhere. It’s not that they’re wrong calling for 4-2, they’re just late as valuations in many non-index stocks collapsed.
I believe they’re missing the full picture because they’re looking to the right of the equation, not the left and they are not analyzing the full story and all the information
Thanks for your reply. I think similar, is just lots of noise in regards of screaming recession lately...which I keep saying we are already on it since end of last year. Now, with the inflation staying high for longer (which I think is the case) FED will need to keep raising or keep rates higher...does this change your thesis at all?
Not necessarily because I look at it like the Fed slowing a car down from it going too fast. The monetary and fiscal stimulus was tremendous in 2020 & 2021. The economy is weakening and will continue to weaken but thinking about the relationship between unemployment and inflation declining… It’s just simply bullish.
If we think ahead, we know inflation will continue to abate. The Fed has room to keep fighting this fight till it’s done especially since unemployment remains durable. If unemployment starts to crack, we will see considerable deflation.
Every day that passes where we don’t collapse is another day for the bulls.
Dillon - thanks for a great write up. You note in reference to S&P that with earnings growth, a P/E 18x gets us to 4500, a nice growth from current levels. What makes you choose 18x when the historic mean is a hair under 16, which indicated just under where we are today?
Hey Cpink- there was no reason why I chose 18 other than it appeared that’s where we are trading right now. If we used 16x as a forward P/E we’d get S&P 4000 @ $250 earnings. So much is dependent on this years earnings and 2024’s earnings.
We’ll have to see.
Dillon, what is this 1-3/2-1 phase? Thx
It was in reference to the image I shared where a new bull market was being born… It’s very, very early stages.