January 16, 2024, 2:06 pm EST
Back to the Ground
The record-high stock markets are not sustainable under the background of extended and broad wars as mentioned in our last article.
Fundamentally, we cannot expect the earnings season would boost the stock price to a record high level as well.
Lastly, the technical overbought in 2023 is not resolved yet. Thus, There will be a sharp pullback for the days and weeks ahead.
The stock market began to reflect the reality today with about -1% down in Dow Jones and -0.6% lower in S&P 500 and Nasdaq.
However, we believe this is just the beginning of the pullback or downtrend. As long as the wars dragged on or spread out, we should see a negative impact on the stock markets. Not only the Middle East present crisis but potential troubles in North Korea, and China-Taiwan have emerged.
It would bring back the inflation threat. The hope for the lower rates is harder to find. We can also see the benchmark 10-year treasury yield back to about 4%.
The outlook for 2024 remained bearish, in our opinion.
