Andrew Slimmon: Equities May Have Hit a Tradable Short-Term Low

Signs of a Market Bottom

• 💡 Andrew Slimmon believes equities have put in a tradable short-term low, despite anticipating a subpar year for the overall market.
• 📈 The VIX hitting a panic level of 25 and subsequently dropping is a key indicator.
• 🏦 Financials outperformed during the downturn and are leading the recovery, which is unusual if a new market low is imminent.
• ⚠️ Credit spreads did not widen significantly, suggesting underlying market strength.
• 🧐 The business uncertainty index reaching a higher point than in March 2020 serves as a strong contrarian signal.

Market Performance and Outlook

• 📉 Slimmon forecasts the market to end the year in the low 6,000s, indicating a subpar year for equities overall.
• 🏢 The mega-cap tech stocks are spending heavily but not yet showing returns, which could weigh down the S&P 500 due to their large market weight.
• 🚀 The '493' (the rest of the market excluding mega-caps) could potentially perform much better.
• 💰 While double-digit earnings growth is possible, market returns might not reflect this due to the index being expensive.

Federal Reserve and Economic Concerns

• 📊 The market is trying to gauge the Fed's response to the probabilities of recession versus higher inflation.
• 🎯 The Fed appears more concerned about the growth side of its mandate than inflation, as medium and longer-term inflation expectations are anchored.
• 📉 This suggests a higher probability of the Fed cutting rates to support the economy and stock market, rather than being constrained by inflation fears.