This coupled with a War in Europe, Chinese Lockdowns and an Ultra-hawkish FED, doesn't bode well for equity prices in the short-run. The market has been in a spiral since January 2022 with inflation ripping through the US Economy. I'm confused about what the market is thinking right now.
We have the benefit of hindsight of knowing that several months of denial happened before the stock market nosedived in 2008, but do people actually believe a soft landing is in the cards right now? Big tech stocks are outcompeting the traditional safety sectors like consumer staples right now. Do people really think things will be different now compared to past market cycles? I know that the more dovish tone of the recent fed meeting and the prospect of rates being raised 25% instead of 75% has many investors convinced we'll have a soft landing, but for inflation to be reigned in, there most likely needs to be a rise in unemployment (and a subsequent recession), which has not happened yet. Forgive me for this noob question but I'm a bit confused that despite a plethora of indicators pointing to a massive market correction ( inverted yield curve, PE and Q ratios are still 60-70% above their arithmetic means, etc), the market is still somewhat optimistic, with the SP500 on the uptick today.
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