Background:
Authored by GoldFix ZH Edit
Two weeks have gone by since Micheal Hartnett put out this report. In this video we read and break it down intended to complement the analysis in ZH's Hartnett:Everything Is Overshooting piece
Hartnett’s Bear Market Trifecta:
Given recent weakness in both Stocks and Bonds, it is a good time to review the scenario he has envisioned for a possible bear market swoon. Here then is an extemporaneous translation and commentary on what may be the roadmap for the next 4 months. We also share some insights into how to read his work that may be helpful for future reports.
The podcast includes:
- Actionable triggers
- Assessing data points.
- Parentheses use
- Why being short is on his radar again
- What makes him pull the trigger: The Savings/Retail/Unemployment Trifecta and FCI
- What makes him wrong
- What makes him really right
- Youtube link if load issues persist
Bottom Line:
- The market is priced for near perfection
- The new "fiscal recession savior" narrative is not panning out in the data yet
- High rates will likely weigh on stock prices
- Look for tightening FCI as a potential trigger
- Trading Risk next 4-6 weeks, but if correct, harder landing and bear market recession for 4-6 months afterwards.
- Positions: Like EM stocks, commodities now.. do not like Tech in the Fall if correct
Final comment: Every time Powell & Co. verbally throw a little water on stocks, and shows reticence to ease, whether in 2023, 2024, or 2025... that furthers Hartnett's case.
Why?
Because when the stock market droops a little that is some part of it realizing Powell ain't messing around. Combined with the transmission lag of hikes hitting FCI... that means reality check lower for stocks if he is correct. Things are priced for near perfection.
One other thing.. it also must mean (in our opinion), that Hartnett feels either Powell will not react to a swoon by pivoting (like how he handled the SVB debacle), or that he does Pivot but it is too little too late.
One thing is for sure. In the two weeks following this report, stocks are now most certainly moving down Michael's prescribed path.
Updates here ...
