It’s amazing what a 200+ point rally can do to an investor psyche. And while everyone was incredibly bearish last week, with numerous commentators predicting an outright collapse, we are back to talking about the Dow 20K. All of this noise aside, here are the two fundamental drivers that will guide the markets over the next few weeks.
- Q-1 Earnings: As is often discussed on this blog, I expect Q-1 earnings to be fairly poor. For two reasons. First, the US Economy is rolling over and second, due to a massive rally in the US Dollar over the last 4 months. Further, I expect quite a few corporates to guide down. The question is……has the market already priced this in or not? If the answer is NO, don’t be surprised to see a quick 10% correction.
- The FED: While everyone is trying to figure out what the FED will do, the entire notion is misleading. What I believe most investors are missing here is the fact that it is already too late for the FED to stop the upcoming bear market. Even if the rate hikes are paused or cancelled, the damage has already been done. We are already in a massive overvaluation bubble that will have to be corrected. One way or another.
Then again, don’t worry about any of that. Mr. Siegel is feeling much better about the stock market and you should buy, buy, buy…..
