Thread by @bravosresearch

This chart is making a lot of investors panic

But the data tells a different story for now

A thread 🧵

2/ Recently, some people have been comparing today’s market to the 1970s

If we overlay a 1970s chart on today’s interest rates, the similarities stand out

It’s easy to see why people get nervous when rates jump

But the data tells a different story

3/ In the 1970s, there were 3 waves of inflation

Each one progressively larger than the previous one

Which led to a prolonged period of rising rates

4/ Today, US inflation has been falling sharply, not rising

This is not the inflationary environment like the 1970s or 2021 that led to rising interest rates

5/ Since interest rates tend to follow inflation, our expectation is that rates will likely trend lower

Assuming we don’t see a major escalation of conflict in the Middle East

6/ Lower interest rates should be a net positive for the stock market

Just as rising rates were a headwind

7/ The market recently broke out of a 3-month consolidation

With all key moving averages still pointing up

These are signs of a strong and healthy uptrend

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10/ Thanks for reading!

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