Why 6000 in S&P 500 Is Imminent

Most everyone has the connectivity of interest rates, the Fed, the economy all wrong.

There seems assured shared understanding regarding equity - we will use S&P 5000 -that:

1. The Federal Reserve matters the most;

2. US Treasury rates, most focus on the US Treasury 10 year, levels can tighten or ease the economy;

3. That the yield curve of the US Treasury 10 years less 2 years is indicating a recession or slowdown in the economy is likely;

4. That the supply of US Treasurys required to fund the large increase of federal spending since 2020 will cause US Treasury rates to increase (see #2) cause a recession and then plunge, and this will coincide with a fall in equity;

5. That foreign pressures - usually China sourced - will export adverse pressure upon equity in the US.

Most of the above all lead to one conclusion, though pundits and experts only deploy one or two of the above recipes, some using 3 or more.

One wag came out calling the S&P 500 “Felicia” and that Felicia was gone with 5260 being the all time peak level for the S&P 500, due to a few of the above.

I have spent a lot of time going over why all the above is fabulously wrong and ignorant, the rampant substitution of popularity as the qualifier for what is reality.

We still think the S&P 500 will reach 6000 and we have in the past provided end of year 2024 as the timing. We freely admit we pulled December 31st out of the air, just as we pulled December 31st 2023 for 5000 level, a call made in QIII 2022. But it gets the point across. And the reasons I called 5000, successfully, despite then as now most calling a much lower S&P 500 are the same now, as in QIII 2022. It is unchanging reality of very large forces and flows that informed me to make the 5000 call and now the 6000 call. The forces and flows are so large that it allows me to easily dismiss pack of memes provided above. I have dealt with these memes in prior posts, so will here describe the key variables that allow common sense to foresee 6000.

The economy is roaring, has been roaring, and now with 28 trillion of NGDP has great momentum such to call for a recession means one is calling for a drop of at least 2 trillion in NGDP which means one is calling for a Great Depression. That so few do this simple math is amazing.