2001, 2008, or 2022

[Anonymous]

The crux of the issue is this: the doomsayers think the Fed is hell-bent on raising rates quickly and to outrageous levels to kill inflation, the economy be damned. The more optimistic crowd believes the Fed can moderately reduce inflation and growth as worldwide structural issues unwind. The latter is the Fed’s stated position, but market commentators want you to believe that the Fed must do the former. Thus, the commentators say sell, sell, sell. Truth is, the hedge funds were terribly wrong about the pandemic (totally missed the equity run up) and now want revenge on retail investors. They’re going to be wrong again.

[Anonymous]

Anonymous wrote:The crux of the issue is this: the doomsayers think the Fed is hell-bent on raising rates quickly and to outrageous levels to kill inflation, the economy be damned. The more optimistic crowd believes the Fed can moderately reduce inflation and growth as worldwide structural issues unwind. The latter is the Fed’s stated position, but market commentators want you to believe that the Fed must do the former. Thus, the commentators say sell, sell, sell. Truth is, the hedge funds were terribly wrong about the pandemic (totally missed the equity run up) and now want revenge on retail investors. They’re going to be wrong again.

Right. The takeaway from Powell's testimony was that inflation is bad, but a recession is worse. People want to keep their jobs. The Fed is not going to run the economy into the ground, particularly before an election.

[Anonymous]

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Anonymous wrote:Goldman and Morgan Stanley think we haven’t hit bottom (and they’ve called this correctly so far).

https://uk.finance.yahoo.com/news/morgan-stanley-goldman-strategists-see-072309250.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZHJ1ZGdlcmVwb3J0LmNvbS8&guce_referrer_sig=AQAAAGuB5nt3c_lLLP0SfSMAJSv2JucPZjDM0iGFXo7AygrUjzkHvSBskWT0sasp8KcxTdFhn4yvylkgzy23HT0kvYgDqyi-s1luqEGulq4g8QBVWQE96opJWXAOfmdUUeK9NoJtMcTGRN9zCHcM5QowADhKuXUaL0vYbwmoMQvyugvB

The key read-across from the 1970s is when investors start to believe that inflation will stay high for longer, equity markets begin to focus on real instead of nominal earnings-per-share rate, which for this year is likely to be negative, SocGen said.

“We have still not seen the true bottom for equities yet,” Kabra said.

His counterpart Michael J. Wilson at Morgan Stanley, one of Wall Street’s most vocal bears and who correctly predicted the latest market selloff, agrees that the S&P 500 needs to drop another 15% to 20% to about 3,000 points for the market to fully reflect the scale of economic contraction.

“The bear market will not be over until recession arrives or the risk of one is extinguished,” the Morgan Stanley team said.

The calls from Wall Street’s top strategists underline how investor sentiment on risk assets has soured in recent weeks as runaway inflation and a hawkish Federal Reserve raised the specter of a prolonged economic contraction. Wilson said that should a full-blown recession become the market’s base case, the S&P 500 could bottom near to 2,900 index points -- more than 21% below its last close.

Really? They've called this correctly so far? Because in April, Goldman predicted the market would fall 21% to bottom out at 3600.

Morgan Stanley’s economist called it correctly.

Called what? The fact there would be a sell off? So did other economists. But just a month ago he predicted a bottom of 3400:

https://www.bloomberg.com/news/articles/2022-05-23/morgan-stanley-s-wilson-says-too-soon-to-turn-bullish-on-stocks

Not predicting the exact place the Dow would settle doesn’t make him wrong. It makes him a LOT more right than the “experts” that are allegedly running the country.

https://www.zerohedge.com/markets/does-terrible-monetary-policy-ever-become-criminal-negligence

The most recent smattering of these downright demonstrably false claims has included:

“There’s nothing to suggest a recession is in the works” - Janet Yellen, last week

“I wouldn’t do it differently. I was very supportive of the American Rescue Plan.” - Janet Yellen, last week

U.S. inflation risk is “small” and “manageable” - Janet Yellen, March 2021

“I don't anticipate that inflation is going to be a problem” - Janet Yellen, May 2021

"I don't think there's going to be an inflationary problem.” - Janet Yellen, May 2021

"In the 1970s, a series of supply shocks became a longer run problem ... that partly occurred because policy makers weren't trusted by the public to deal effectively with inflation. But I certainly see no evidence that that's the case now." - Janet Yellen, November 2021

The Fed “shouldn’t overreact to ‘temporary’ inflation” - Neel Kashkari, November 2021

“There’s nothing that I’m seeing in these fundamental factors that leads me to think that this is a long-term change in inflation or inflation expectations.” - Neel Kashkari, November 2021

“If we overreact by saying ‘let’s change the path of monetary policy’…that could lead to a worse long-term outcome for the economy.”- Neel Kashkari, November 2021

“What’s the economic theory that a one time boost of fiscal spending, a one time boost of demand - it leads to higher prices, yes - does it lead to higher inflation, which means ongoing year after year after year of continuing price increases. I don’t really understand the mechanism by which Larry Summers thinks this one time fiscal stimulus leads a change in the path of inflation.” - Neel Kashkari, November 2021

“The key here is from my perspective as a Central Banker is not to overreact. We want to pay attention to the data, we want to look at the evidence and we want to make our adjustments prudently, not just overreact because Twitter is hyperventilating.” - Neel Kashkari, November 2021

“I can’t predict the future any better than Bill Dudley can.” - Neel Kashkari, November 2021

“Inflation is higher than I expected, and it's the high inflation has lasted longer than I expected. We know the US economy is recovering from the COVID shutdown and the downturn. But the recovery is uneven, and demand has recovered more quickly than supply has. So given those facts, it's not that surprising that inflation is coming up higher than we expected. But it should start to normalize over the course of this year, if a couple things happen: if workers come back into the job market. We're still missing 3 or 4 million workers. And if supply chains start to sort themselves out, which I hope that they will. But obviously the Federal Reserve has an important role to play and we're going to do our part.” - Neel Kashkari, January 2022

“So that's why the fact that the yield curve has flattened a lot over the past six months, that's giving me some indication that we're probably not that far away from neutral, not as far away as maybe we thought.” - Neel Kashkari, January 2022

“So you know, neutral is a concept and so it's not as if there's an equation exactly where it is. For me, it's somewhere between 2 and 2.5 percent.” - Raphael Bostic, May 2022, when CPI rose 8.6%

First, you linked to Zero Hedge. Seriously?

Second you are proving my point. No one can predict the future perfectly. You were the one who quoted an economist stating we were going to see a further 33% drop to S&P 500. I countered that those people tried to make prior predictions about the bottom and are moving the needle as new information comes out. You countered by showing old quotes from people who made prior predictions that are also proving to be wrong as new information comes out.

This is why you should not try to time the market. Because even the best folks are sometimes wrong and adjust their views in light of new information.

FWIW, that economist also predicted the S&P 500 will hit 5000 by 2024.

You’re attacking the source, but those are direct quotes. They’re not incorrect.

And they’re not “old.” Some are from last week. You’re saying someone who predicted the trend, but got the exact magnitude wrong is as wrong as someone (who happens to making policy) who not only got the trend 180 degrees wrong, but can’t even see reality as it is happening.

If you mean “don’t time the market” as in, don’t sell all of your holdings and put the cash under your mattress, I agree. However, there were and are reasonable adjustments that can be made in preparation for what was (as in last fall) and is (as in now) clearly coming.

You are either a broker that didn’t properly position your clients and is trying to talk them into continuing to buy, irrespective of what the market is doing, ir someone who bought all spring and is now trying to explain why they did the right thing.

No, I am standard W2 employee who has DCA since I was 18 years old. I did it through 2000, 2008 and and I continuing to do that today. I won’t retire for 20 more years so aside from my kids college funds, I am a long term investor.

I notice you did not address the fact that economist thinks the S&P will be at 5000 by 2024. That’s short term for someone like me.