But market prices are forward looking, and virtually every company is telling investors that they’re going to rough period. Valuations should be going down not up.

not the next 4 years when the Economy tanks. They know it's coming, they are trying to get what they can before the big drop.
Usually they miss it and lose a fortune.

Rich get richer.

By historical standards, stock prices are pretty high. American price earnings multiples are the highest in the world and similar to where they were when forward guidance was so much more positive.

And Trump keeps hedging on putting in the additional tariffs. The market isn't strictly rational and no change is ever linear.

I have not done a detailed analysis, but forward guidance and analysis research, which drives stock prices, was a lot rosier in December than it is now. I suspect that forward multiples are significantly higher now than they were then.

Throughout December the S&P 500 was between 5850 and 6090. Today it is at 5600ish. So that is in the neighborhood of 5-8% down.

Nasdaq is worse at being down 10-14% from December numbers.

It is making partial rebounds at times because Donnie keeps changing the rules and narrative on tariffs. The market fell off the table when they were announced but since then he has done things like make exceptions for certain products and industries. Plus he has made statements about things not staying high. So the perceived damaged of the tariffs gets mitigated by those softening stances.

Don't get me wrong, sane people should never make financial decisions trusting what he says but that is the narrative.

Virtually all economists were very bullish in Q4, and forward guidance for most companies was optimistic. Now it is pretty pessimistic. If a stock is $100 and the CEO is projecting 2025 to generate $5/share, and the analyst community agrees with him or her, then the forward multiple is 20x. If the CEO and the analyst community cuts forward guidance to $3/share, then the stock is more expensive even if it has dropped 10%. At $90/share, the forward multiple is now 30x.

A simpler analysis is that the trailing P/E should roughly equal projected growth. This has not held exactly true for a while, so maybe P/E is 1.25x growth rate. The S&P 500's P/E is about 25x right now. Everyone raise their hand who thinks most U.S. companies can grow top, or even bottom line by 20%?

Short term forward guidance is grim for most businesses, and there is not really an intermediate or long-term projectable investment case for many of these businesses given the regulatory uncertainty. So why are stock prices so high?

And this doesn't even start to address why the dollar is appreciating or yields are down from 10 days ago, neither of which make any sense. All things being equal, less trade would equal less demand for U.S. dollars, and there is a flood of new treasuries hitting the market this year, which should drive yields up.

AI.
Dead Cat Bounce.
Uncertainty cleared, consequences to follow.
Reversion to the mean.
Suck the public back in so the Big Boys can sell.
Pump and dump.
Recession ahead.
Historically markets really go down when the Fed cuts interest rates because it indicates recession already underway.
We're not there yet.

For way too long we've used the stock market as a stand in for the economy when for most of us, we're only invested for our retirement. Sure the stock market going up is great for that, but the short term changes aren't especially relevant for most of us.

My broker will go over charts with me ad nauseam and tell me what's going to happen. Then it does the opposite. If he truly could predict what was going to happen, he'd be a retired millionaire living in a castle in the tropics. Instead he has a 9 to 5 like everyone else.

Charts and graphs can't predict the future.

The market often goes down a lot of bad news, then comes back up a bit when people realize the news was bad enough that the fed is more likely to lower interest rates, e.g.

I think Trump and ilk have cooled tarrif and Powell talk. Didn't Trump do something with auto tarrifs too? Things aren't as shock to the system as "Liberation Day" was.

When Trump "behaves" (HA!), Wall Street seems to like it.

I dunno. My portfolio is creeping back up.

Dump has said these triple-digit tariffs are not permanent, and China is carving out exceptions to it's 145% retaliatory tariffs.

had good earnings reports.

That Trump will do an about-face on his tariffs yet again. They'll probably keep this up until companies consistently report losses.

Never was better advice than this year

Meanwhile buyers enter the market because they think they see bargains.

Through mid April, when markets had not dropped by more at that point despite all the bad news, because bond yields and the dollar were depreciating as one would expect.

But all that changed. Something happened in mid April to make stock prices shoot up at the same time as bonds and the dollar increased in value. What is driving buying of U.S. assets in the last 10 days?

I wouldn't touch this market with a ten foot pole.

It is a mixed bag, but tech stocks have generally been good and appear to be driving the market. Meanwhile McDonalds earning were not so good.

The tariffs really haven't hit the market and not all companies have projected tariff hits, perhaps on purpose or perhaps because Bessent has promised them it will all be resolved soon.

143% tariffs. We have had the best 100 days. Tariffs will lower your taxes. Everything is going to work out well. Tourism is doing fine. Wait until you see the numbers. USA will be bigger and better than before. Out country will boom. It's all BS, but remember, a large section of the nation believe his BS. .

...there is a ton of irrationality to the actual trading cycles. Mere announcements of tariff policies or the backing off of said policies would not--in a rational world--impact the market on a daily or hourly basis. Nothing has actually happened yet to anyone following an announcement. Rationality would demand actual economic data to move markets, and that would take months and even years to establish. Clearly, that is not what we are dealing with in the market on any given day.

My guess would be that investors--especially those that saw the declines coming from a mile away as so many should have--are taking the opportunity to buy at a bargain and be poised to sell as the pause ends. From this we can expect an even larger selloff than we had at the initial announcement phase of tariff policy despite the sentiment that things are starting to settle down--because investors really only want one thing: profits.

Investing is really a game of guessing what other investors are going to do more than guessing what companies are going to do. This is the fuel for the irrationality. Investing has far more to do with game theory than it does with the underlying economics.

Because the market is based on short sidedness which means it is based on the here and now not the future! Right now META and X are driving the markets higher due to greater then expected profits!

are already priced into the stock. Both have virtual monopolies, but neither has a lot of room for growth, and Meta does have some competition developing. Both trade at strong but not outrageous growth multiples, and I would argue that both are priced relatively appropriately, with a premium for being large caps that all the index funds need to own.

Regardless, everyone that looks at markets already knows all of that about both companies. Nothing has changed in the last 10 days that should swing not just these two stocks, but the entire market.

The market is 100% focused on the future. Stocks are not something that is consumed. They are bought on the expectation that their value will increase in the future so they can be sold later at a profit. That is why so many focus on "earnings per share going forward" (next year's earnings).

The rub is that the "future" might be ten minutes or ten years, depending on objectives.

Yes, Meta and Microsoft are rising today on good earnings reports yesterday. X is not publicly traded.

There is also a definite blindness to the abnormality of tRump 2.0. The market pundits are following their usual indicators and statistics as if the market action is supported and surrounded by a normal backdrop of government action / inaction. These tariff taxes are not normal. DOGEy damage is not normal. Deporting and self-deporting a significant portion of your lowest tier of labour is not normal.

The drop in GDP for Q1 was an anomaly based on front-loading of imports to beat tariffs. It will disappear in Q2 but will be replaced by more systemic things like unemployment creeping up and business failures rising.

Plus the optimism about murky "trade talks" and phantasmic "trade deals" is way overdone. At points like this it pays to be a bit contrarian.

PS - The market is still down over 2% just in the past month. A week or two of returns like we regularly saw during the Biden administration doesn't change the fact that Trump is a fuck-up who is causing self-inflicted damage to our economy and the market will inevitably decrease significantly once again when he resumes his usual ways.

#ETTD

that the market is going up.

The difference in 2007 was that the huge problems in the U.S. economy, unsustainable consumer and bank balance sheets, were opaque and difficult to see until after the fact.

Today, the tariff and regulatory calamity is occurring in plain sight. Everyone should be able to just look around their house and figure out the impact of these tariffs, or turn on the TV and see the slippage in property rights as the U.S. teeters on the edge of being a Rule of Law country.

... from Canada for commercial TP.

Okay, its commercial we'll just use residential ... what happens to the price of residential ? Yep ... goes sky high or those machines are going to be used to make commercial

That's just one off the cuff example