A Real Recovery or a ‘Dead-Cat Bounce’?

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Last week the S&P 500 closed on a positive note and put an end to a multi-week losing streak that almost led the index into bear territory.

According to Master Investor, this is to be more of a dead-cat bounce than a real recovery, as economic data continues to point to weakness. Too many years of ‘easy’ money-filled Wall Street with excess liquidity, boosting stock prices to unsustainable levels.

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On the one hand, money flowing to the stock market is the primary reason why inflation remained subdued. But, on the other hand, this excess liquidity mixed with a buying-the-dip mentality, created the conditions for market crashes to happen from time to time.

Unfortunately, inflation is rising faster than anticipated (even though this likely has nothing to do with monetary easing) and central banks are tightening. All that easy money sitting in the market will disappear.

We aren’t done yet, according to Master Investor.

We will assist a downtrend trend that could even end in a crash if central bankers put too much pressure on liquidity. But one way or another, the next few months will most likely be weak for stocks.

Every cloud has a silver lining, and the current market correction will provide some good entry points for growth stocks later in the year.

 

Source: Master Investor by Filipe R. Costa

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Luka Marjanovic

Partner

As Partner at Internet Bull Report, Luka brings deep expertise in Capital Markets, Financial Marketing, and Strategic Communications to his work advising clients. He is passionate about exceptional client service and devising transformational strategies that enable unrivaled performance. Luka holds a Bachelor’s in International Business and a Master’s in International Management. Over the years he has worked with organizations across a wide range of industries, playing a lead role in defining and delivering the strategy and direction of new and existing business operations. Prior to his business education, he studied biology-and-biotechnology and served in the Danish Royal Army as Second Sergeant; leading and managing a group under extreme pressure and conditions. Luka has spent significant time abroad, living and working in seven different countries. When he's not in the office, he's chasing the next gusts windsurfing, carving the mountain snowboarding, or out in the forest for a jog.