Having most recently argued weeks ago that Street sentiment was way too negative on recession odds, corporate earnings and stock prices, the #MysteryBroker weighs in on the current key market juncture, lays out a few likely scenarios rather than a single high-conviction view...
Before detailing the scenarios, #MysteryBroker sees the ultimate path from here almost wholly dependent on whether the Fed responds to forward-looking inflation indicators that suggest to him inflation is already headed down decisively by moderating its tightening plans - or not.
First scenario, #MysteryBroker says is a pure bear-market rally, S&P peaks no higher than 4200, drops to an ultimate bottom between 3150 and 3400. This would require a recession start by early next year "at the latest..."
Second scenario, #MysteryBroker says, is a new bull market began June 17, S&P will reach 4545 by Sept, 17 (+25% in three months) and new highs by early 2023. No recession before late 2023 is needed for this one,..
Scenario #3, says #MysteryBroker, is a retest or retracement close to the June lows by early October, then a bottom and new bull market and new high by June 2023. Either no recession until late 2023 or one that began early July and ends early next year is needed here...
However it ultimately breaks, #MysteryBroker sees no major market move lower before September. The key will be to watch how the Fed responds to lower inflation indicators in coming months. A rate hike of 50bp or more in September will raise the risk level. for the economy/stocks.
One possible but les likely outcome cited by #MysteryBroker is the 1946-1949 period. Similar to now, a post-crisis (war) economy, pent-up demand inflation shock, bear market, then stocks mostly sideways for over two years before a recession/market bottom ultimately took hold.
That's it for now, please mind the rules.
(Feel free to ignore. Please don't ask for updates, it never works. Whatever snarky response you might have to #MysteryBroker's current indecisive market view, someone already beat you to it so don't bother.)
(Feel free to ignore. Please don't ask for updates, it never works. Whatever snarky response you might have to #MysteryBroker's current indecisive market view, someone already beat you to it so don't bother.)
https://twitter.com/michaelsantoli/status/1126487466540617728
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