To begin my rant I like to start of this quote"There is saying...

To begin my rant I like to start of this quote

"There is saying on the Wall Street that a bull climbs a wall of worry
That a bull market is always born on pessimism. A bull market always generates momentum on bad news"

I am optimistic, some of you may ask why are you still so optimistic?

Dont you see that we’re gonna have a recession? Don’t u see that some economic data is weakening?

Why are you optimistic that this may be the bottom of the market?

Remember the main reason why we got into this bear market is because of high inflation. That is the main reason and the high inflation is causing the fed to raise rates aggressively to bring down inflation and people fear that this will force economy into a deep recession that will cause company earnings to decline significantly.

I dont see the stock market getting worse, why ? If you see my previous post that there are clear signs that inflation has already peaked, commodity prices are coming down , agricultural commodity oil prices, gas prices are all coming down already. If we take a look at the latest five year break even inflation rate below





This is the leading indicator to inflation, it is still on this downtrend. It peaked and then broke the trend line support and it picked up a bit when the 9% CPI was released a few days ago but now is coming back down again . So in other words the market is really realising that inflation has peaked we are probably going to go down in terms of inflation which means the federal reserve can start to pause or even reverse their aggressive monetary policy.

Now for the next FED meeting is late July, the fed is expected to raise interest rates by 0.75 basis points and then raise it another 50 basis points and another 25 basis points. The market has prices in the fact that the FED will raise interest rates to 3 percent by the end of the year that is already priced into the markets so if the FED does that or if the FED reverses from that…..hallelujah THE MARKET WILL CONTINUE RALLYING .

The market will only crash from here if the FED is more aggressive than what people expect, in other words if the FED raises interest rates more than three percent this year then well I’m sorry I was wrong the market is gonna crash.

But I dont see that happening because inflation is moderating and the FED has no reason to be more aggressive than what is currently planned . So this is the first reason why I believe we have already hit the BOTTOM OF THE MARKET.

Second reason is this:

Borisboy keep saying this is gonna be as bad as the 2000.com crash, he keeps saying again and again financial crisis, market is going to come down 80% or more. Well, I agree it could happen, ONLY IF COMPANY EARNINGS DECLINE SIGNIFICANTLY. But has that happened? NO……………

Lets take a look at the numbers. We are currently in the middle of the quarter 2 earnings season where companies are reporting earnings as you guys know . Now every time before earnings season, analysts will always have an estimate what they expect earnings to which normally the companies will give an estimate and analyst would then consolidate there estimates , usually what happens is that going to earning seasons , the companies will come like low ball, you know I dont think we are going to do very well, they are going to lower their revenue and profit guidance so that they can beat it easily that is always part of the game.

Lets take a look quarter two earnings BELOW, you can see that analysts expect the S&P 500 collectively to report earnings growth of 4.2 %, this is cross all industries all sectors . Now specifically from the chart you can see that these are sectors where they expect earnings decline, financials expect to decline 25.2%, consumer discretionary decline 11% , utilities down 9.8% , consumer staples down 1.9%, and of course energy they expect a growth of 255%. So some sectors expect to decline , some sectors expect to grow but consolidated overall S&P 500 earnings expected to go up 4.2%, so that was the expectation going into this earnings season.

So so far we’ve quite a number of companies announcing earnings already and have they beat this estimate? Well lets take a look below



So you can see above that so far for quarter 2 of the companies that have reported so far 80% of them have reported positive earnings surprise which means that they report earnings and revenue better than expected. And 20% of companies have reported worse than expected. For example, like Tesla came in worse than expected, JP Morgan worse than expected, we had dominos pizza worse than expected, and most recently snapchat came in really horrible results. BUT SO FAR MAJORITY OF COMPANIES ARE BEATING EXPECTATIONS




So in regards to BORISBOY BUBBLE BURST CALL? Yes we could BUT ONLY IF company earnings fall as we can see below chart, back in 2008 financial crisis and also 2000.com bubble crash



on both crisis, you can see at the time the company earnings of S&P 500 fell to about 30-40% decline. So we got to have company earnings drop 30-40% in order to have the crash BORISBOY constantly talking about. Do we have that sort of company earnings DROP? NO WE DONT. EARNING ARE PROJECTED TO GROW IN QUARTER 2 AND WE ARE BEATING THOSE PROJECTIONS




AND moving forward if you look at the fact set BELOW, this is a fact set you can go to their website looking ahead analysts are expecting earnings growth of 10% for quarter 3 and 9% for quarter 4 and all in all for the calendar year 2022 analysts expecting an earning growths of 9.9%.

So in other words in order for the market to crash even more we need to have earnings decline by significant amounts and currently we dont have that. Again in this quarter 2 we are expected to grow at 4.2% which is really low but its still growing and WE ARE BEATING THOSE EXPECTATIONS at least so far and again quarter 3 and quarter 4 expected to grow as well.

So it is very difficult for the market to crash even further unless we have company earnings crashing which we dont get now. What is also interesting is that among the 20% of companies that reported disappointing results that wasnt expected, their share price went up. Like JP MORGAN , their profits dropping 28%, share price went down for a few minutes and then went up. Dominos pizza announced profits worse than expected, and share price went up. Tesla reported earnings worse than expected , and share price also went up.

From my years of being in the markets, one of the things I have noticed is that when a company announces bad news and bad earnings and the share price won’t go down, usually that is a sign of market bottom.