What if the post-Great Recession business cycle ended long ago, and this is the turbulence before the next big market run?
I think it’s likely that the bull market ended in late 2015 (into early 2016) and we’re currently witnessing the chaotic transition that occurs prior to a reset.
But wait, by definition a bull market ends with at least a 20% decline from a market top—and that hasn’t happened since the Great Recession of 2008-2009. True, but I would argue that easy monetary policy from the world’s global Central Banks have moderated downtrends for the past decade. And while the US market hasn’t dropped 20%, other countries have. Furthermore, US corporate profits did drop nearly 20% from their 2014 peak and didn’t start to recover until late 2016. (see chart)
Market resets are accompanied by unexpected events…think BREXIT, Trump and the diminishing dominance of OPEC, to name a few.
Ultimately, bull markets are driven by increasing profits. So the fundamental question is, are corporate profits about to decline? Or advance higher?
We’ll all just have to wait to find out.
[ Related video: Trump Clinton Stock Market Parallel https://youtu.be/9LZNtW_4Xd4 ]
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