{"id":20790,"date":"2023-06-10T03:25:59","date_gmt":"2023-06-10T07:25:59","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/two-cheers-for-the-new-bull\/"},"modified":"2023-06-10T03:26:01","modified_gmt":"2023-06-10T07:26:01","slug":"two-cheers-for-the-new-bull","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=20790","title":{"rendered":"Two Cheers For The New Bull"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture>  <\/picture><figcaption> <\/figcaption><\/figure>\n<\/p>\n<p>Let\u2019s start with the good news. The \u201ctwo cheers\u201d in today\u2019s headline are for the S&amp;P 500 having clawed back gains of twenty percent from the low point of the index\u2019s price trajectory reached in October last year. Twenty percent isn\u2019t nothing. On<span class=\"paywall-full-content invisible\"> Wall Street, in fact, a twenty percent gain is one of those magic milestone numbers signifying a transition from one thing to another, in this case from a bear to a bull. The chart below shows the market\u2019s flight path since it last notched a record high back on January 3, 2022.<\/span><\/p>\n<p class=\"paywall-full-content invisible\">\n<figure class=\"regular-img-figure\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/06\/saupload_chart_06_09_23.png\" alt=\"S&amp;P 500 price performance\" contenteditable=\"true\" loading=\"lazy\"> <\/picture><figcaption><\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible\">That\u2019s the good news. The one cheer we have withheld from the celebration is the fact that the market\u2019s progress to date from the October low still leaves us around ten percent (10.4 percent to be precise) below that January \u201922 record high. We\u2019ll offer a full-throated \u201cthree cheers\u201d when<span class=\"paywall-full-content invisible no-summary-bullets\"> the market hits that milestone, which in our opinion has a reasonably decent chance of happening within the current calendar year (remember that \u201cour opinion\u201d does not equate to anything remotely certain, and should not be construed as investment advice).<\/span><\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">The Wall of Worry<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Market pundits are fond of speaking of the \u201cwall of worry\u201d that stocks climb as they battle through the daily onslaught of risk factors. There have been plenty of those this year \u2013 the collapse of several prominent banks back in March, the ongoing tightening of credit conditions and the persistence of higher than desired inflation being prominent among them. In the past couple weeks the bond market seems to have changed its mind on the likelihood of near-term interest rate cuts by the Fed, leading to a narrative shift on monetary policy. Ahead of the FOMC meeting that concludes next Wednesday, the new consensus thinking is that the Fed may \u201cskip\u201d as opposed to \u201cpause\u201d \u2013 in other words, keep rates where they are for now, but likely raise them again for perhaps one final time in July. That\u2019s a far cry from the consensus as recently as a month ago that June and July could see a Fed pivot to cutting rates.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">All those things could still pour cold water on the stock market rally. So could a change of sentiment around that small number of megacap tech stocks driving the lion\u2019s share of gains so far this year, as we discussed at length in last week\u2019s commentary. This week, though, we have seen some tentative signs of life from other parts of the market that haven\u2019t done particularly well this year, like value stocks and small caps. Perhaps a rotation is in the offing. Valuations in large cap tech stocks are expensive, but the market overall is still relatively moderately priced in comparison to recent historical levels, as shown by the next twelve months P\/E ratio (green trendline) in the above chart). If the economy continues to surprise to the upside, e.g. ongoing resilience in the labor market and consumer spending, that could work to the benefit of some of those lagging sectors and asset classes.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Longer Cycles<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">What we should not assume, anytime soon, is that the market will be reverting to the patterns of the previous decade. Throughout the 2010s, downturns vanished almost as soon as they came into being. Remember the \u201cEbola crisis\u201d of 2014? That consumed investors for all of two days before prices snapped back. Even the more substantial pullbacks of the decade \u2013 the near-default on the debt ceiling in 2011 and the attempted monetary tightening in 2018, both of which came within a whisper of that twenty percent bear market threshold \u2013 reversed and recaptured the previous record high within a matter of several months. Such are the tailwinds to risk assets provided by the lowest levels of benchmark interest rates in recorded history.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Those days are likely gone, for now at least. We expect to see longer cycles ahead, both for growth environments and for reversal periods like 2022. Does this mean that the bull market which officially started at this morning\u2019s opening bell will have an extended run? Nobody knows, of course, but here\u2019s hoping.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><em>Original Post<\/em><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><em><strong>Editor&#8217;s Note:<\/strong> The summary bullets for this article were chosen by Seeking Alpha editors.<\/em><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4610684-two-cheers-for-the-new-bull?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Let\u2019s start with the good news. The \u201ctwo cheers\u201d in today\u2019s headline are for the S&amp;P 500 having clawed back gains of twenty percent from the low point of the index\u2019s price trajectory reached in October last year. Twenty percent isn\u2019t nothing. On Wall Street, in fact, a twenty percent gain is one of those [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20791,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-20790","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Two Cheers For The New Bull | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Let\u2019s start with the good news. 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