All this talk about declining earnings and higher interest rates, all the negativity as short positions continue to build against stocks, miss the point.
It has been around 270 trading days since the stock market bottom gave its early formation hints on May 11, 2022. I had been a bear on what the FED was doing for eleven years. The FED’s program that Bernanke instituted in 2011 was wrong headed and I have talked about it a lot. But, in 2021 as I watched what Powell was doing to compensate for keeping rates at zero for way too long, it struck me that he was not punishing the people and entities that perpetuated the problem. No doubt much of this is due to the fact that he came out of the Carlyle Group, one of the major big money groups in US and world finance, and the last thing he was going to do was punish his friends. So, what he did was give a lot of warning, some six months before he did anything serious, giving his buddies plenty of time to roll out of or protect their positions before he dropped the hammer. He was not going to be another Volker, he was just a fixture at the helm of our central bank. So, things rolled down and the talk out of his buddies led by the Trojan Horse, JP Morgan head, Jamie Dimon, talked the bear talk and hoped the little people dumped all their positions. This would allow the big guys to remove their protection and get long again.
But low and behold, the little guys hunkered down, used their savings put aside during the pandemic period to hold on to and add to long positions. Now we see the big guys in a major quandary with big short positions and a market breaking out to the upside. For me these 270 days have been a time to slowly build positions, this is no bull market like the ones financed by funny money during the past 11 years.
These 270 days have been a time to tough out and weather the pressure while doing research on what the forces will be for a durable New kind of Bull Market. My premise is that the driving force will be investing in climate tech endeavors. To my mind what we have seen so far is the Building Blocks portion, the chips and tech support companies, next we will see the build out of the following sectors, EV, Solar, Building Reconstruction (air handling and insulation), Electrical Grid / Receptacle installations, infrastructure, etc.
While we are a consumer nation and will remain so, there will, I think, be less emphasis on retail consumer directions.