Just like everyone else, I'm trying to make sense of this market euphoria. We keep seeing bad news, from low port traffic to negative GDP growth but the market isn't bothered.
Here's what I think is keeping the market afloat, and rising. Since covid, several investors have been 'buying the dip', and it has always worked in their favor. Platforms like Robinhood make it so easy for even young investors to keep buying the dip. Investors are conditioned to think that 'the market will always go up in the long run', which is obviously true. But I guess the difference of opinion is how long is 'long'? While these 'dip buyers' may think this is a matter of a few weeks / months and then we'll keep going up again, most institutions and several investors on Reddit who are 'aware' of what is going on are staying in cash.
On the other hand, I feel a tad bit more comfortable that things may not go that bad that soon -- because Scott Bessent (described as the only adult in the room) has taken over negotiations with China, and was instrumental in getting the Ukraine deal signed. He is very well respected, and thoroughly understands the connection between geopolitics and financial markets.
We're seeing reports of 'empty shelves coming soon', however China has silently waived off some tariffs and so has the US. There is de-escalation, and I believe China wants to do this without much excitement, because Xi does not want to appear to be weak. Let's not forget, China is hurting too.
All said and done, I think we will continue to chop sideways for weeks or months until the real bad news starts coming. That is when the Fed will actually reduce the rates, possibly being the catalyst for another downturn, which may be the actual start of the 'bear market'.
I don't think majority of Redditors are wrong in their prediction, but maybe we're wrong in the timing? Thoughts and comments appreciated.