Has the next bull run started already?
Team Veye | 18-Jun-2023
Till earlier this month, the clouds of uncertainty were looming large across global stock markets. There was a threat of economic calamity because of the deadlock over US debt ceiling issue.
With the Congress approving a deal to raise the borrowing limit and saving from a potential default, the impasse is virtually over. Postponed till 2025, the concern is now on a back burner.
Till some time back, there were concerns about rising inflation and subsequent interest rate hikes. The global markets have started hoping that inflation has peaked out. When the CPI inflation showed moderation in May, it took away a chance from the Fed to effect a rate hike.
The CPI edging lower than expected may, in effect, direct the central banks to pause, if not stop altogether. Although the Fed has indicated of not reducing rates till next year, they are forecasting a Fed Funds rate of 4.1% in 2024 and 3.1% in 2025. Currently at a midpoint of 5.13%, meaning potential of a 100 basis point rate cut next year with further 100 basis point cut in 2025.
There are already signs of changing sentiment. And stock markets are responding with accumulation in select stocks already being witnessed.
The fact is that big guys do not come and tell you the start of a bull run while they are accumulating. They tell you once their accumulation is done. And when the retailers jump in, it marks the start of a bull run.
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