The Wall Street Two-Handed Economist
Every market event now comes with a built-in bullish and bearish explanation.
Latest Fed Decision: "Rates Unchanged"
Bearish:
The Fed is worried about inflation. Higher interest coming. Risk assets are at risk.
Bullish:
The Fed is not hiking. Soft landing is intact. Risk assets should rally.
Fed Signals Future Rate Cuts
Bullish:
Cheaper money is coming. Stocks and crypto should rise.
Bearish:
Why are they cutting? What do they know about the economy that we don't?
Fed Signals No Rate Cuts
Bullish:
The economy is stronger than expected.
Bearish:
Borrowing costs remain elevated.
Inflation Comes In Hot
Bullish:
Companies can raise prices. Nominal earnings will grow.
Bearish:
The Fed may tighten further.
Inflation Comes In Cool
Bullish:
Rate cuts are closer.
Bearish:
Demand is weakening.
Employment Report Strong
Bullish:
Consumers have jobs and can spend.
Bearish:
The Fed may keep rates higher.
Employment Report Weak
Bullish:
The Fed may cut rates sooner.
Bearish:
Economic slowdown ahead.
Consumer Sentiment Rises
Bullish:
Consumers are confident and spending.
Bearish:
Consumers are spending and causing inflation.
Consumer Sentiment Falls
Bullish:
The Fed may become dovish.
Bearish:
Consumers are worried about the economy.
Gold Rises
Bullish:
Investors are protecting themselves from inflation.
Bearish:
Investors are worried about the economy.
Gold Falls
Bullish:
Confidence in growth is returning.
Bearish:
Higher real rates are hurting gold.
Oil Rises
Bullish:
Global demand is strong.
Bearish:
Inflation pressures are returning.
Oil Falls
Bullish:
Inflation is cooling.
Bearish:
Global growth is slowing.
Bitcoin Rises
Bullish:
Institutional adoption is accelerating.
Bearish:
Speculative excess is returning.
Bitcoin Falls
Bullish:
Healthy correction in a long-term bull market.
Bearish:
Speculative excess is unwinding.
The Dollar Rises
Bullish:
The U.S. economy is strongest in the world.
Bearish:
Multinational earnings face headwinds.
The Dollar Falls
Bullish:
Exports become more competitive.
Bearish:
Confidence in the dollar is declining.
Stocks Rise
Bullish:
Investors are optimistic.
Bearish:
Markets are becoming complacent.
Stocks Fall
Bullish:
A healthy correction creates buying opportunities.
Bearish:
Investors are finally recognizing the risks.
Conclusion
No matter what happens:
✔ If the market goes up, there is a bullish explanation.
✔ If the market goes down, there is a bearish explanation.
Wall Street's greatest achievement was inventing a framework in which every possible outcome confirms the original thesis.
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A quarter reported, a quarter saved, a quarter wiser.
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