Everyone is trying to time the top. The common claims:
“Stocks are expensive, we’re in a bubble.”
“Trump is doing crazy, even unconstitutional things.”
“Inflation is ticking up again.”
Everything sounds bearish… yet the market keeps climbing.
My view
We’ve just lived through one of the most hated rallies in recent memory. Since the April lows, the market staged a V-shaped recovery that almost nobody expected. It caught most investors offside — myself included. Now we’re sitting at all-time highs. So, what’s next?
Why I think the bears are wrong
Positioning: Investors are well aware of the negatives and are already hedged against them.
Inflation: Yes, it’s ticking higher, but this is intentional. The Fed isn’t going to fight it aggressively — inflation is part of the new regime.
Debt dilution: The administration needs controlled inflation and needs growth to dilute debt burdens.
Banking deregulation: Policies are moving toward lighter rules, which could release more liquidity into the system.
AI tailwinds: Like the internet in the 1990s, AI could boost productivity and, paradoxically, increase unemployment in some areas while driving efficiency gains.
I usually focus on analyzing individual companies, but since my university days I’ve always had a passion for Macro. These are just my thoughts out loud — I could be totally wrong. Still, I believe that to be a successful investor you need to stay flexible, informed, and open-minded. The crowd is often wrong, but the hardest part is not just identifying that — it’s understanding what the crowd is thinking and, more importantly, how they are positioned.
The Latest Macro Data
GDP Growth Rate: 3.33% (vs. 3.0% expected)
Initial Jobless Claims: 229k (vs. 230k expected)
Core PCE Price Index: 2.9% (vs. 2.9% expected)
GDP came in hotter than expected, while jobless claims and core inflation landed in line. We’ll need to watch revisions on jobless claims — lately they’ve been unreliable. In my view, as companies increasingly integrate AI into their operations, we could see a noticeable uptick in jobless claims and unemployment over the coming quarters.
As for inflation, Core PCE ticked up to 2.9% in July. Yes, inflation is warming up, but stocks continue to rally on it. Many investors remain mentally anchored in 2022, when higher inflation meant aggressive rate hikes and plunging equities. But history suggests something different: around 3% inflation has often been a “sweet spot” for stocks, especially when combined with deregulation and a dovish Fed. That’s exactly where we are now.
Tariffs may temporarily raise certain prices, but by definition that isn’t true monetary inflation — it’s not devaluing money supply, it’s a relative price adjustment. In other words, this time the impact is likely temporary. Yet investors remain anchored to the Fed’s failed “transitory inflation” narrative of 2022. Recency bias fuels much of today’s bearish sentiment.
Howard Marks recently shared his view on the market:
The U.S. remains the best place to invest thanks to its innovation, free markets, rule of law, and strong companies. He compared it to a great car at a high price — expensive, but worth it.He also noted that while the Magnificent 7 are pricey, they are expensive for a reason: these are among the best businesses in history, with scale, growth, and deep moats. His bigger concern is not big tech, but the rest of the market that has been dragged higher in valuation without the same fundamentals.
It’s easier for the market to keep moving in the direction it’s already going. To change course, we’d need a real catalyst — and right now, I only see reasons for it to keep grinding higher.
I hesitated to write something this bold, but honestly, why hold back? I can be wrong — anyone can be. If I am, I’ll own it. But this is my base case right now.
With that said, the best way to benefit from this uptrend is by turning over rocks and finding the right opportunities. If you’d like to dive into my specific company deep-dives, you can subscribe for the paid analysis.
Going forward, I’ll also be publishing more free pieces like this one — because I genuinely enjoy writing about the current macro environment and sharing my perspective.
I’d love to hear your thoughts on this analysis. Share your views — I’m looking forward to discussing it with you
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In short, you were bearish at the bottom of the large decline earlier in the year and you are bullish at the current top of the subsequent recovery.