Welcome to the Show, SANTA CLAUS RALLY. Let's go!
Consider SEASONALITY
Historically, the 4th Quarter is the strongest season for Stocks, Especially in a Pre-election year.
December is the strongest month in a Pre-election year.
The Seasonal Economy
Excess Savings were set to run out in 2023, and that was Revised up to 1 Trillion.
- Seasonal Spending
- Seasonal Employment
FUNDAMENTALS
Q3 Earnings Growth is Set to Increase 📈
EARNINGS Look
Cyclenomics
- The economic cycle looks a lot like the early '90s,
Out of the Savings and loans Crisis emerged the commercialization of the internet, Amazon, eBay, Windows 95, and Internet Explorer, paving the way for the Digital Economy.
- The S&P pumped 50% over the next two years.
Today, housing, commercial real estate, retailers, and regional banks are leading the recession. However, Under the Hood, productivity is beginning to rise, and the Economy is transitioning from a rolling recession to a rolling expansion.
1995: Commercialization of the Internet2023: The Commercialization of AI, Blockchain, Electric Vehicles Energy Storage
The Global Manufacturing Cycle is picking up, typically led by the Chinese Credit Impulse.
Liquidity is Weak; it may be bottoming.
Tight Forces = End of Hiking Cycle
Inflation is Tame
Inflation continues to Ease.
- Headline is Flat Month over Month despite the spike in oil
- Core dropped 2/10ths
Services Excluding housing is now below 3%.
Shelter is falling The only reason Shelter isn't falling faster is because Lodging Away from Home Jumped.
PREMIUM STOCKS
- Pure Revenue Growth: Demand for Product
- Pricing Power - Strong Brand
- Increased Efficiencies: Margin retention
- ⬇️Low Debt ⬆️ Cash Flow = Strong Balance sheet
- Share Buy Backs: = Scarcity + EPS ⬆️
- Debt Funding via Money Market Funds 🤑
- Disruptive Innovation w/ Secular Adoption
- Benefits from FISCAL: IRA, Infra Bill, Chips Act
MARKET RISKS
- The Middle Eastern Conflict Expands specifically between Iran & Syria
- China invades Taiwan
- Oil Spikes above $100