The past year has left many bears doubting themselves. The bear impulse arguably peaked in June 2022, more than a year ago. It makes sense from a macroeconomic perspective because that’s also when inflation’s velocity peaked.
The preponderance of evidence still favors the bears though. The rally in mega cap tech stocks brought them back in line with the rest of the market. Away from tech, income-oriented dividend stocks and ETFs are turning negative in 2023, yet many have still outperformed $QQQ since the top in late 2021. The DJIA has gained less than 5% this year. All of this is consistent with rising bond yields. I could go into all the negative economic data coming out of China, Germany and so on, but I don’t need it. Higher rates alone will trigger a major bear market.
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