Two words: BOOM PHASE.
I am not a cheerleader for the bears or the bulls. Stocks go up and they go down. There are cycles. The perma-bears have been wrong. Very wrong. Since 2011 I have heard them talk about the next recession. Saying there will be another recession is not very insightful. Of course there will be another recession. Most people know this. Very few don’t know this. Janet Yellen is on record saying recession are events of the past. I want to be there when the eggs splat on her face.
Why is a recession not imminent?
First, the yield curve isn’t inverted. It has compressed, but not inverted. Interestingly enough, most of stock market gains comes just as the yield curve compresses (10 year compresses to 6 month interest rate). This is an interesting phenomena that I will dedicate a post to another time.
Second, Corporate profit growth is strong. Earnings per share of S&P500 has had good momentum since 2015.
Third, money supply growth has been elevated. Recessions usually occur when money supply growth has collapsed.
Fourth, all indicators such as business sentiment, fed national financial conditions index, etc. have been constructive to good economic growth and higher stock prices.
Fifth, the US dollar has been tame. I watch the US dollar very closely. It is a key variable to understanding what is happening.
We are in the later stages of the bull market. Most of the gains will be made right now. I have positioned myself and readers of the site to benefit from the coming bull market.
When I believe a recession is looming I will say so. The indicators above will turn negative. At which point we will go to cash and wait.