Key insights
- The author expresses strong skepticism about the current market rally, citing geopolitical risks (Iran, Strait of Hormuz), rising oil and shipping costs, bond sell-offs, and increasing corporate credit costs. They believe the market is ignoring these fundamental issues and driven by fear of missing out, creating a disconnect between market valuations and the real economy. The author anticipates a correction when these factors impact earnings, jobs, and defaults.
The charts look great if you ignore what is actually happening in the world. There is a shooting war involving Iran, traffic through the Strait of Hormuz has been choked, and oil and shipping costs are screaming higher. On top of that, we just watched an 80+ billion dollar selloff in U.S. bonds, and credit keeps getting more expensive for corporate to fuel capex. Then there are rumors about members of fed considering to raise rates.
Stocks keep grinding higher, but it does not look like strength; it looks like people chasing price because they are afraid to miss out. The real economy is dealing with higher funding costs, rising input prices and geopolitical risk that can flip markets in a single headline, while valuations act like we are in some kind of golden soft-landing fantasy. This does not feel like genuine, durable growth. It feels like markets are betting they can pass the bag to the next buyer before all of this catches up in earnings, jobs, and defaults. At some point, that game stops working.
What do you think? Is this market showing real resilience, or are we walking across a floor covered in bull shit pretending it is solid ground?