How Does The SPX/NQ Bubble Pop? - Revisited

Risk assets are starting to make some Fed members feel uncomfortable with their easing bias, making the 2% target harder to achieve. But this won't stop going until the Fed actually changes course

I put together a post two months ago which walked through my thoughts about how we could see a top in equity markets. You can see it here from March 13th, 2024:

How Does the SPX/NQ Bubble Pop

I would say many of the concepts I thought about two months ago still largely hold true today. While stocks did fall nicely from the high in April on back of what I thought was the beginning of this path, SPX and NQ made new highs this month after Powell’s more dovish May press conference performance suggested that he still thinks financial conditions are tight and monetary policy is sufficiently restrictive to bring inflation back down to 2%. Interestingly, IWM still hasn’t taken out the highs for the year set back in early March, as small caps remain most exposed to a higher for longer interesting rate environment.

Here are my updated thoughts on this path: