re: What Is There To Be Bullish About?

With respect to inflation, it appears to be taming and in many cases, prices are substantially lower
The consumer appears to be resilient

Also, an interesting aspect to inflation is that the price to consumer oftentimes lags which means profit margins grow. This is why some retailers are seeing solid numbers.
This could continue for a while too

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Last week, the S&P 500 recovered half of the bear market losses.

This is a very good sign, as stocks have never moved back to new lows after this happened.

In fact, a year later, higher every time and up 19.3% on average as well.

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Isn't it also true that every time the "yield inverts" we are in/start a recession about a year later?

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Don't feel like looking it up but I feel like the yield inversion you are talking about has happened more than a couple of times since the GFC but we've only just now had our first actual recession since.

We get to use words like "never" and "every time" because of wicks?

Happened in 68, 73, 81 and 00 too, fwiw.

Politics has a heavy hand on the economy, business atmosphere and investment confidence these days as well as the supply chain -- especially in energy. Everything Brandon and his leftist puppet masters have done is a strong negative. They are spending nearly 1 trillion on useless or unnecessary crap and calling it "inflation reduction."

That will start ending in November and be effectively hobbled in January.

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Did Hillary Clinton and the FBI add the text notes?

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I pulled the chart from material speaking to investors' concern over geopolitical impact on markets. So, yea, wasn't my intention to point out those items - just that the S&P 500 makes money over the long-term.

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And inflation isn’t going away yet - 8.5% inflation isn’t sustainable. If we don’t see it drop below ~7.5%, then market will believe this inflation is still a threat even if it’s not extending itself

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If anything is going to keep inflation that high, it will be energy prices and/or if fuel prices climb back up after they stop raping the SPR (they are still high yet enough consumers seem to have become conditioned to accepting $3-$4 gallon gas nationally as a norm to go back to normal purchasing habits).

Fuel was the other big factor driving inflation to our current levels, the primary being over-liquidity. While the liquidity issue is being addressed, it's pretty much a certainty at this point that energy prices will be far higher than normal for months to come. Fuel (gasoline and diesel) will be interesting to watch as the draw down on the SPR is set to continue into November. This should mean prices remain around $3-$4 nationally for gas into January, but there's so many things which can happen to change that. Still, fuel remaining high will keep inflation from retreating quickly.

I've said before and I'll say it again, I don't see a path forward for inflation to be below 5% before 2023. As long as we have continued high inflation, reports of "strong sales" and businesses "making profits" are largely smoke and mirrors as inflation's hit on currency valuation is outpacing the increase in physical dollars businesses are bringing in. Many seem to be happily blinded by looking at nominal numbers.

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Every week i still see food prices increasing.

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This is another silent issue people aren't really discussing to any depth beyond your quote. One of my cornerstone philosophies of life is "hunger is a powerful motivator", it's part of why Roman poet Juvenal coined the phrase "panem et circenses" (bread and circuses). The wider context on this is that he was saying that as long as government can keep people fed and entertained, most of the citizenry will be willing to ignore government failings.

Here's a dirty little secret: even though CPI has shown a drop for July, Food has risen every single month since May 2021. Every. Single. Month. Food increase for July was 10.9%, up .5 from June (YoY). This is faaaaar outpacing wage growth. The longer this goes on, the more it's going to impact other retail sales (clothes, electronics, etc).

So what happens when we still have free circuses for the masses but bread starts becoming too expensive?

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Through 8/18, more than 90% of $SPX stocks were above their respective 50-day MA, for the 5th consecutive day. That kind of sustained strength is significant, usually leading to more ahead. Fairly low average drawdowns.

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The single failure 1 year out was after the Feb-20 '87 event, which had a max drawdown of -21.6% out 200 days (Black Friday crash). Prior to that, $SPX had gained a max of 18% on day 129. At the end of the 1 year lookout period, $SPX was -8.4%.

Most of the max drawdowns were quite early after the event. 4 of the 17 experienced their lowest point within a week. 3 more had their low in the second week.

Only 2 of the 17 prior events happened when $SPX was below the 200-ma, like now...
3/4/1988
5/7/2009

Special attention should be given to the GFC period, which really spans from 2008 through 2010 (European Debt Crisis). We have nothing close to that situation with an economy running at full employment, money freely moving.

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