Random Thoughts

It so happens that media in general, and financial, in particular, is biased toward negativity. Progress is slow, and efficiency gains are in the shadows, but alarmism attracts viewers and sells ads. It's easy to take a position on the market, bullish or bearish, and dig up supporting evidence. In the industry, it's called "talking your book". It's an intersection between wishful thinking and confirmation bias. Yet, every time one gets a conviction it's worth remembering that markets are what they are because of a wide range of opinions — often opposed ones.
The following are succinct points for each side.

Bearish:
-  Stubborn inflation. High and rising rates will eventually break something. 
- Monetary tightening by the FED.
- Elevated valuations. P/E, CAPE, or anything else.
- Extreme concentration of leadership in the market.
- High and rising public debt. Interest payments exceeded the DOD budget. 
- Strong dollar (DXY).
- Insurance liabilities for LA fires.
- Office real estate woes on balance sheets of regional banks.
- Higher mortgage rates reduce discretionary spending for new buyers by a sizeable amount. Big increases in home insurance.
- Risk of sizeable deportations.
- David Rosenberg.

Bullish:
- American exceptionalism. A strong economy, low unemployment, and healthy job growth.
- Salary increases outpace inflation. Even more so for skilled workers at the top. 
- High Normal interest rates.
- Continuation of high CAPEX spending, AI investments, factories, and data center construction. 
- $2T of deficit spending.
- Expected deregulation from the new administration.
- Onshoring.
- 20% of mortgages are below 3%. 55% of mortgages are below 4%. 40% of homes carry no mortgage.
- Population growth
- Jim Bianco (neutral)

Pick your poison.

#finance
January 2025

www.group-telegram.com/br/random_from_sherlock.com/549

143 viewsJan 21 at 19:26

It so happens that media in general, and financial, in particular, is biased toward negativity. Progress is slow, and efficiency gains are in the shadows, but alarmism attracts viewers and sells ads. It's easy to take a position on the market, bullish or bearish, and dig up supporting evidence. In the industry, it's called "talking your book". It's an intersection between wishful thinking and confirmation bias. Yet, every time one gets a conviction it's worth remembering that markets are what they are because of a wide range of opinions — often opposed ones.
The following are succinct points for each side.

Bearish:
-  Stubborn inflation. High and rising rates will eventually break something. 
- Monetary tightening by the FED.
- Elevated valuations. P/E, CAPE, or anything else.
- Extreme concentration of leadership in the market.
- High and rising public debt. Interest payments exceeded the DOD budget. 
- Strong dollar (DXY).
- Insurance liabilities for LA fires.
- Office real estate woes on balance sheets of regional banks.
- Higher mortgage rates reduce discretionary spending for new buyers by a sizeable amount. Big increases in home insurance.
- Risk of sizeable deportations.
- David Rosenberg.

Bullish:
- American exceptionalism. A strong economy, low unemployment, and healthy job growth.
- Salary increases outpace inflation. Even more so for skilled workers at the top. 
- High Normal interest rates.
- Continuation of high CAPEX spending, AI investments, factories, and data center construction. 
- $2T of deficit spending.
- Expected deregulation from the new administration.
- Onshoring.
- 20% of mortgages are below 3%. 55% of mortgages are below 4%. 40% of homes carry no mortgage.
- Population growth
- Jim Bianco (neutral)

Pick your poison.

#finance
January 2025

BY Random Thoughts