In Search of the Bull’s Demise

I read a whole lot of analysis about the market every week. Lately, much of that analysis has been overwhelmingly bearish. In fact, I’ve read more bearish analysis over the past couple of months than I’ve read over the past two years.

This makes sense, of course, given the swoon in stocks and the ramped-up volatility that has slammed markets in Q1. So, what’s at the core of this bearish thesis? What is the main thread these analyses have in common, and how should investors look at it?

To answer those questions, I’ve enlisted the help of my favorite macro analyst, Tom Essaye, Editor of the Sevens Report. The following guest editorial was written by Tom and edited by me for this publication.

When Will the Fed End the Bull Market?
By Tom Essaye

There’s been a lot of bearish analysis coming my way of late. Most of that analysis assumes that the yield curve is telling us the Fed is about to commit a “policy mistake” and choke off the recovery — and end this bull market.

Now, in general, I agree. At some point, the Fed will hike rates too high (like they always do), and that will choke off the expansion (like it always does) and end the bull market. But what all this bearish research I’ve been reading has been missing is a compelling answer to the question of when this will happen. Most of the research says it’s soon, but none of it does a good job of backing up that assertion with facts.

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