Warren Buffet, Jeremy Grantham, Ray Dalio, Michael Burry and every evil investment-banker alive all agree inflation + higher interest rates are the two absolute worst things for stocks. Why are you long now, can you answer me that? Even Elon got rid of 100B of Tesla stocks at the top in '21 and in April '22, did you? If you want to be long stocks, buy Exxon and other oil and gas, they are cheap and oil will go up.
Banks have stopped lending to industry & consumers.How do you have rising company profits if money shrinks? Normally credit expands by 4-7% Now it CONTRACTS for the first time in 15 years:
fred.stlouisfed.org/…
fred.stlouisfed.org/…
This is a blaring air-raid-siren red alert.This alone is enough to cause a bear market.If in addition, oil picks up from here, and rates follow it, we will see SPX at 2400.
All non-energy companies are expecting lower revenues this year thanks to:
•inflation costs
•higher debt service costs
•shrinking money supply
Spreads will blow out when the downgrades begins. High Yield companies are overextended, their debt level are too high and they are in need of new equity. This will only take place at very low valuations.
submitted by /u/llaoll
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