It seems the Bulls and Bears are as split as ever now that we're in the middle of another major market rally. There has also been a lot of discussion on if we're in a recession currently, or if we have yet to see the real recession.
Bulls say we haven't seen unemployment rise significantly, so we can't be in a recession regardless of the 2 negative Q's we saw in the first half. Bears say we are about to go into a recession (if we aren't already) and employment is always lagging.
This got me thinking, there are only 2 ways to look at this market from here:
- The recession started at the beginning of the year, and we were in it until end of Q2 basically. This would line up with the fact that the market bled out all year to price in the 2 negative quarters we had. Q3 GDP was positive, and Q4 Atlanta Fed GDP forecast is showing growth again, so stocks have bottomed.
- We are not and have not been in a recession this year. The entire down move in the market over the last ~10-11 months was multiple compression, and next year we see the impact of rate increases on the economy, and that's when we get a real earnings contraction + higher unemployment.
Which camp do you fall in?
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