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Linked above is the SP 500 with markers notating peaks and recessions, in its 2001 dot com inventory bubble, 2007 monetary bubble and the 2021 inventory bubble, that are vital for understanding my reasoning.
Right here's my take: incoming 2nd recession: possible however not quickly bear market: over inventory market: about to take one other run up/peak
2 necessary issues of be aware: 1. Whereas the yield curve inversions have predicted the entire earlier recessions (together with the temporary however not proven covid recession from feb-april 2020) this doesn’t really line up with the peaks and troughs out there as seen in my graphs 2. Recession occur in Bear markets (as per definition counting on unfavorable GDP development), however bear markets can occur with out recessions
The 2001 bubble had its peak a simply barely earlier than the YC inversion. The 2007 bubble had its peak a full yr after YC inversion. The 2020 temporary 3 month recession was a results of covid lockdowns and due to this fact not relevant to our present scenario.
So taking a look at our present market we ought to be conscious that the December 2021 peak and following 1 yr bear market pull again might be the only results of covid tech shares working up and never the lengthy overdue bear market/recession everybody's been speaking about incoming. After all inventory market =/= well being of the economic system. There are many jobs and development (each by way of pop development and tech improvement) within the economic system proper now which might be why the inventory market appears as bizarre because it does proper now.
See, with each earlier bear market following a peak, the bear market lasts 2-3 years, however virtually inexplicably we see a bear market by way of 2022 lasting lower than a yr, with the present run up being a optimistic indicator for the SP500.
My conclusion? We haven't really seen the highest of the market but. As a result of if we had, then the SP would have continued dropping for the following ~1.5 years, and simply because the YC inverted doesnt imply we are going to IMMEDIATLY see the recession nor does it line up with the highest of the market. What we do have nonetheless is extraordinarily optimistic development alerts (pop growing/tech advances), a LOT extra money out there with the typical investor in buying and selling apps, extra folks returning to work, which can seemingly proceed by way of the following few years. After all anybody betting towards the U.S. market is often mistaken as markets over time pattern up logarithmically with bear markets sparse and lasting little greater than 3 years. However that's the factor, it continues up LOGARYTHMICALLY and proper now we’re under that common line wanting on the sp500 on a 20 yr chart. One other run will occur beating 472 simple, seemingly adopted by an precise bear market and recession, assuming the present YC inversion tendencies deeper, and doesn't instantly pop again up prefer it did in 2019, in any other case we could not see the deep 2-3 yr lengthy bear market in any respect.
Ideas?
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