Projection? Wall Street Says Bears Hoping for a Fall

ZH: JPM: Wishing This Market Lower Is As Frustrating As Holding A Beach Ball Under Water

The above is a premium post at ZeroHedge, but comes on the heels of a relentless string of very bullish calls from all over finance. Not only are bulls bullish, but bears also are talking about a melt-up. This JPM headline makes me wonder if Wall Street isn't trying to dump as much as possible though. I can only speak for myself, but I don't hope the market will drop. I get that there are technical rallies. What I do not see here, is how the bond market rallies on a Fed pause or pivot when all signs I've seen from financial markets tells me commodities such as crude will rip higher if that happens. Additionally, I'm seeing gold behave like it maybe wants to crash afterall. Shouldn't it rip higher on a pause or pivot, since logically that would mean future real interest rates will drop? Real rates will rise if inflation falls and the Fed holds the line, but if that level of real rates is priced in, a pause or pivot should cause a bullish repricing of gold.

Stepping back a bit, about the only market "signaling" a pivot is the most solipsitic one: stocks.

Anything can happen in markets. Anything. Maybe bears are focusing on gold and copper instead of stocks because of the strength in stocks. Maybe bulls are focused on stocks and that's causing a divergence. Maybe bulls are right and the Fed will pivot or Powell will touch his face in a way that means stocks go up 10 percent. Sentiment is funny, that's why you have to pay attention to how stocks react on news items. The market is clearly in a very bullish and optimistic mood at the moment. I look out over the coming months and even years, and do not see how the Fed pivots or pauses. If anything, I expect the opposite. If they ease too early, they'll blow it the same way the 1970s Fed did. The risk of stagflation would climb. Bonds would eventually reject the pivot and sell off, forcing the Fed to chase the market interest rates.

In the 1970s the Fed cut rates midway through the recessions and that was the wrong move. Not repeating would mean the Fed hikes rates until a recession is evident (the recesion will likely be backdated) and then refuses any rate cuts or moves very slowly such that rates are still high at the end of the recession.

To sum it up, I don't hope for a fall. I don't see how it can rise for very long and if it rises, then it's more profit for the bears on the eventual downswing.