If you’ve listened to my podcast, more than once (incessantly) you’ve heard me say that I can’t predict the future. Actually, I can predict the future, but it’s not the type of prediction that people want to hear.
The undisputed future of the stock market is that it will: go up; go down; or go sideways.
Despite sour investor sentiment and endless media driven Chicken Little narrative, over the past few weeks the market has moved sideways. The diversified Equal Weight S&P 500 is unchanged year-to-date and essentially where it was on election day. Short and near term the market is moving SIDEWAYS. But it’s better than that. In recent weeks, the broader market has been outperforming the S&P 500. (see chart)
The stock market correction is correcting an imbalance of the S&P 500 that’s been dominated by a few megacap companies (Nvidia, Microsoft, Meta, Alphabet, etc).
The uncertainty of April’s pending retaliatory tariffs could cause more market instability in the short term. But long term, the market is underestimating deregulation. (More about that in future podcasts.)
Whether you love or hate Trump, it can’t be denied that his chaotic style has created the uncertainty that’s driven down stock prices. However, from a realpolitik perspective, Trump’s actions are effective. Much like a spoiled brat that throws a tantrum to get what he wants.
As one example, every president since Truman has tried to get European allies to pay more for their own defense. None were successful, including Trump’s first term. But things have changed in short order. Even Germany is taking on massive amounts of debt to fund military initiatives.
Chaos is uncomfortable but creates opportunities.
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