Will the S&P finish the year

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Below

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You see an 11% or more fall?

Significantly higher. There will be a fourth quarter rally, which will easily put the S&P above where it began the year.

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You see an 11% or more fall?

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It all depends on when the recession kicks in. The writing has been on the wall ever since the COVID injections of liquidity happened. You can't force over a trillion dollars into an economy in under 2 months and then raise rates to counteract it while Congress continues to deficit spend at near-record levels (thus counteracting some of the impact of the rate increases) and not believe at least a recession is coming.

The market has done well, but it's been on the backs of consumers trying to ignore inflation through abusing their credit cards. Rising credit card delinquencies, rising credit card debt and continued high inflation doesn't equate well to market growth.

There are economic pressures building. The longer they build, the bigger the explosion is going to be when they finally reach critical mass. When that happens and what the final straw will be on that camel's back is anyone's guess, but it is coming because math doesn't care about market optimisim/pessimism.

Consumers AND the government can't continue borrowing and spending just to borrow and spend more while rates are high (and likely to go higher) and inflation continues to keep real wages stagnant.

All this is to say, I don't know if we'll see 11% by the end of the year, but when the drop happens it will likely be at least 11% (if not more) over a long period of time as consumers hit the end of their credit rope and are then forced to focus on buying mainly needs vs wants (looking at you, new iPhone, car, sneakers, etc).

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What do you think the rally will be built on?

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Do you even 0dte bro?

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Overly bearish sentiment/positioning and positive earnings surprises for Q3.

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Fair enough. I see the spike in PPI over the last few months making positive earnings more difficult, but Lord knows I have been wrong before.

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I also think its highly unlikely we see a true recession until the labor market falls apart

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100% agree. JPow has stated that an increase in Unemployment is one of the big indicators they are looking for to signal pause/reversal on rates. I think we've seen too much borrowing and spending (and borrowing to pay for borrowing) for that to not end up being a snowballing effect (ie: once jobs start being cut, consumers are no longer going to be able to afford to even just service all of the debt they've created).

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What do you think the rally will be built on?

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JPow is magnifying the rate hike effect with his talk. Threatening higher rates to give others pause may prevent the need to deliver them. He kept things vague last week for a dampening effect and the market responded.

I think we'll see some surprisingly positive results in Q4 given that JPow has lowered expectations again. By lowering expectations they've tilted the table in favor of bullish investors. If another rate hike happens, it will be expected and not a big deal. If it's deemed unnecessary, expect a strong positive market reaction. Throw in some seasonal bullishness this Winter and I'm hopeful. Add the AI picture becoming more clear and I'm almost excited.

Having said that, it could all fall to shite. If I knew what was going to happen I would be on my private island.

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All this is to say, I don't know if we'll see 11% by the end of the year, but when the drop happens it will likely be at least 11% (if not more) over a long period of time as consumers hit the end of their credit rope and are then forced to focus on buying mainly needs vs wants (looking at you, new iPhone, car, sneakers, etc).

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This.

At this point, I'd predict the S&P will end the year up 15-20% from the start of 2023. September has been the worst month for stocks every year for a century and month is almost done. Still up +12% YTD. That final quarter will push us back up closer to what we saw in July.


No clue on equal weight.

Half way through the fourth quarter. Is everyone still sticking with their predictions from seven weeks ago? I still think the fourth quarter rally puts us significantly above where we started the year.