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‘La la land?’ The stock market is ‘insanely disconnected’ and due for a ‘reckoning,’




“Speculation is rampant and being championed by a bold new breed of millennial day traders,” he said. “The mania is based on a widespread hope in Fed money printing. The catalysts for reckoning are numerous as a major cyclical economic downturn has only just begun.”


Smith used this chart of plunging S&P 500 Profit Margins to show “how insanely disconnected equity prices are from their underlying fundamentals.” He warned that buy-the-dip investors are “not paying attention and have simply been too eager to call the bottom.”



“Markets driven by euphoria never end well,” he explained in a note to clients this week.


“The U.S. stock market today is in la-la land. It is discounting a new expansion phase of the economy at the same time as a major recession has only just begun.”


Market Watch

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