Recession canceled? U.S. stock market 'frothy' after S&P 500's strong first half

Right, because the market has never behaved irrationally.<p>We&#x27;ve got student loan payments resuming soon, a steady stream of commercial real estate mortgages that are refinancing at higher rates for the next year or two, a population who&#x27;s wages are still on average lower than they were pre-pandemic after adjusting for inflation, supply chain whip-saws as supply&#x2F;demand continues to over&#x2F;undershoot in some sectors, the federal reserve saying another couple of hikes are in order this year, and the boomers continuing to age into mass-retirement.<p>You want to dollar cost average into the market fine, but I wouldn&#x27;t take out any margin loans for at least the next year.

While I welcome optimism, it’s premature to declare strong top line S&amp;P 500 performance as the end of economic uncertainty. Tech is the only sector with significant YTD gains: Brent Crude Oil, Regional Banks, Transportation, and Retail are all down YTD.<p>In the S&amp;P 500, the “Magnificent 7” stocks (NVIDIA, Apple, Google, Microsoft, Meta, Tesla, and Amazon) are responsible for *85%* of YTD gains.<p>Coatue’s East Meets West macro view from June 30 is the source for the above, and it contains a number of great insights: <a href="https:&#x2F;&#x2F;www.coatue.com&#x2F;blog&#x2F;company-update&#x2F;coatues-2023-emw-conference" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.coatue.com&#x2F;blog&#x2F;company-update&#x2F;coatues-2023-emw-...</a>

&gt; Sonders said she sees the U.S. as having experienced “rolling” recessions in different segments – such as housing or manufacturing – as opposed to the entire economy being swept up in a full-blown downturn. “The recession versus no recession debate” is missing the current nuances of this cycle, in her view.<p>If we reach 2025 and there&#x27;s no 2000 style recession, this is the most likely cause. The recession is happening industry-by-industry and at different speeds. Some are sharp and fast (commodities), some are slow (commercial real estate), some happened early (tech), some happened late or haven&#x27;t even happened yet (hospitality).<p>It also makes sense from a first principles standpoint: If everyone saw it coming due to covid, different industries will react differently, but every industry would definitely act. The difference between now vs &#x27;08 and 2000 is information availability, both from the obviousness of the catalyzing event and how ubiquitous financial information has become in the past 15 years.<p>Even as recently as 2008 it was considerably harder to find and act on economic data vs today. Most companies of any size can discover and act on economic data based on how they see fit. Given this, it&#x27;s not shocking that tech acted first given they have immediate pricing effects and have information-driven cultures. Compare that to CRE where contracts span decades, and pricing is opaque by design.

This Peter Lynch talk <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=rf_f8GV0yYM">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=rf_f8GV0yYM</a> is one of the best videos on the stock market I have seen. It’s from the 90s and is relevant today. I like how it goes into how there is always something to worry about like a recession , the difficultly of predicting the market and how even with one of the most successful funds from the 80s every time the market went down his fund went down.

Time to hike interest rates at least by 200 basis points or more.

The S&amp;P 500 is not a solid indicator of overall economic strength, and can reverse very quickly...<p>Change my mind?

All the talk of a recession last year was always just bluster to justify layoffs and other anti-worker policies and actions. Anytime there’s that much unanimity in the press about the economic outlook whether it’s a coordinated move or just groupthink, you know it’s not going to happen.

Other than RSUs, I&#x27;m 100% bonds for the last year, and no desire to bother with it. Yeah I&#x27;m probably missing out. Or maybe not. My brain just can&#x27;t handle caring about it anymore.

Anyone have any idea what one of the better index funds is to invest in? Doing some research and trying to follow the general Buffett Rule as it were and I can’t seem to determine what is legitimately going to track the S&amp;P 500 and what claims to but actually doesn’t

If there&#x27;s anything we&#x27;ve learned in the past 20-some years: the stock market has very little to do with the health of the overall economy.<p>Stock prices are the measure, and the measure is manipulated.

I guess now it&#x27;s the time to double down the bets. The more &quot;liquidity&quot; you provide the more the stonks go up again!

Is there an estimate of how much the US stock market is actually based on the US economy?<p>Most of the listed companies are global after all.

always remember, &quot;the market is not the economy&quot;

More proof the dollar is worth less than ever.