The current macroeconomic environment shows that the US will unavoidably enter a recession between the end of Q3 and mid-Q4. The Fed is pushing the boundaries and has stated until recently that the Fed Funds rate will stay elevated for some period, which in my opinion, the markets are not pricing in correctly. Operating margins and earnings, especially for tech companies will become suppressed as we are getting closer to the upcoming recession, and the majority of stocks will be in a bear market, that will not stop until the Fed signals that a rate cut is absolutely needed, and restart QE by buying unlimited amounts of government and corporate debt. I believe we are at the late stage of this cycle, where markets are mispricing the odds of a sharp correction and investors are falsely led to believe that the Fed will be able to achieve a soft landing.
The red pattern is the daily close of the Nasdaq e-mini futures from 2008.
The red pattern is the daily close of the Nasdaq e-mini futures from 2008.