LIVE! Bond Yields DROP! IMF Warns: "Higher Is Inflation Coming." COUNT ON IT! Updates. Mannarino
From Greg M
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This is not the beginning of the next bull cycle yet, IMO. When Powell announces they need to cut rates around Nov 1st, I expect the S&P 500 to drop down to 3837.25 area which is an EXTREME Demand zone.
Why would it fall if a pivot is announced?! Because institutions and hedge funds have been dumping their positions since the Ten Year Yield went above 4.3%. Risk in this market is still substantially high, and the real money has not even come back into the market yet. The market will fall so they can buy back into their positions at a cheaper price because they have to hold dividends that pay a lower % yield than 2021. There will be a correction to bring valuation back to the table, because of greed. They want penny's on the dollar.
For anyone who does not believe that this will happen...compare interest rate cuts to SPX.
History shows that a FED Interest Rate Cut always leads to a substantial decline in the market. This is because the positions that institutions dumped (at higher rates) always leads to a mass sell off so they can buy back stock at cheaper prices, to hold longer term.
Higher rates decrease dividend yields, and corporations do not want to start having to increase dividends via rate cuts at overvalued prices.
We have only just begun to see inflation.