Rising labor costs signifies the second trigger of the inflationary trap. Fundamentally, this spells the end of the party. The only way the Fed can get out of this - increasing rates. Economics 101. This doesn't mean the axe will drop tomorrow. Look at the 2001 run-up. We could go up awhile before we go down. Writing is on the wall.
But the market chose to read it the wrong way. Remember the "experts" have been feeding the street with the triple rate cut bullshit since last year, up till like a month ago, the talking heads on cnbc were still talking about rate cuts lol. Now that the 10 year has broken 4.9 and approaching 5 it couldnt be any clearer. I chose to back off when the 10 yr hit 4.9, looks like I might have saved myself from some pain here.
Every time you shout "buy the dip," you insinuate that dip isn't the beginning of a larger and more substantial retracement (or worse). Or do you profess to have perfect knowledge as to what signals or doesn't signal the beginning of a correction?
I don't have any knowledge. I just do what historically worked based on statistical evidence: buy/sell short term corrections within an underlying longer-term trend. This worked in my backtesting and that's what I trade. I was never able to make money putting my finger in the wind and declaring the end of the bull market and then going net short 200% based on that gut feeling. Maybe you can.
You could have said the same thing in 2000. You'd be buying just a few dips in a very short time frame and losing your ass.
Earnings Yield vs IRate delta was -3% in 2000. Its +4% now. Little difference. Of course, starting today rates could go up 2% tomorrow and earnings could implode next couple of quarters, but I prefer not to anticipate and rather react once it materializes.
You're cherrypicking a few out of literally dozens of catalysts that have the potential to initiate a correction or a substantial retracement (at some point, the lines blur anyways).