Key insights
- The author questions the market's resilience to geopolitical events like the Iran war, inflation, and interest rate concerns, noting a consistent upward trend ('melting up') despite negative news. They highlight a 50% market gain since April 2nd and contrast current corporate profitability with the dot-com bubble. The piece seeks insights into potential catalysts for a market pause or downturn, suggesting a disconnect between economic realities and market behavior.
Can we just accept that the war had no impact on the market? The market being disconnected from the actual economy is a separate discussion, but war has had no effect on the market at all. It has just been melting straight up, despite TACO and the peace-deal flip-flops. Bad news meant up, and good news meant a higher melt-up.
I’ve only been trading since 2012, so I can’t comment on the 2008 sell-off and rebound. But I’ve seen a few sell-offs in my time: Brexit, November–December 2018, the Covid crash, the interest rate sell-off, and then the Liberation Day sell-off. Ever since the Liberation Day rebound, we have been melting up and up. Have we ever seen this kind of euphoria before? The market is up 50% since the Liberation Day sell-off back on April 2nd. That is a 50% return just by buying a basic index—not picking individual stocks, but literally just buying SPY.
I'm not asking anyone to predict the top, but if war doesn't affect the market, if inflation doesn't affect the market, and if there's no way interest rates will rise either... what gives? I’m looking for some scenarios and want to hear insights from people who have been in the game way longer than I have.
And please, don't bring up the 2000 dot-com bubble. That burst because companies had zero earnings. Currently, all these companies are making a shit-ton of money hand over fist. So, what are the other possibilities that could actually put a pause on this? It surely can't keep doubling every two years, right? Billions and trillions don't even seem to matter anymore—it all just feels like monopoly money.