Given that the market of 2019 has developed a propensity for low volatility, steady gains in the face of mounting fears of everything from geopolitical catastrophe to global economic Armageddon, it is only a matter of good form to remind the downtrodden bearish contingent of what lies ahead.
Earnings season is about to kick off this week. While earnings won't be spectacular across the board, they won't be disappointing either. There won't be anything there to justify either fear of an impending recession or an economic slowdown in any form. It will be the status quo. Good earnings, generally, with cautious but optimistic guidance.
The cautious guidance that is coming will lead to a host of companies that are going to pummel estimates in the quarters ahead, as the economy continues to run at a healthy pace, with numerous upside catalysts in the offing.
Further increasing the probability of earnings beats in Q3 and Q4 is a U.S. Dollar that is primed for weakness during the second half of the year.
Financials, as has been discussed ad infinitum here in recent weeks, are about to witness a fattening up of their profit margins due to increasing interest rates.
A rate cut of some magnitude will likely take place in July, followed by perhaps one more at the next Fed meeting.
Right as the market is settling into the reality of two rate cuts at two Fed meetings, the President, having gotten his way of taking back 50 basis points of rate increases late in 2018, will strike a deal with China.
In the meanwhile, misallocated investors globally, finally comprehending that they are being relegated to a modern day version of The Golden Girls by remaining in government backed fixed income instruments, will be forced to pour capital in the markets during Q4 at what is perhaps a historic pace.
Bulls...you aren't bullish enough.
Bearish snowflakes...enjoy the melt.
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