Cole Grinde
Stock & Options Investor, Dividends/Value/Fundamentals, Tesla
US stocks are being hit harder than they should be, and widespread bearish macro indicators point higher, since the market usually does the opposite of what most people expect. September is typically a bearish month. The Fed under Kevin Warsh is unlikely to raise rates this week, because underlying inflation is closer to 2.8% once a temporary rise in oil prices and macro tensions are set aside. x.comÂ
This is one of the best times in recent history to buy US stocks, because today's macro problems are short-term while AI and robotics drive the next industrial revolution. Oil above $100, wars in Iran and Ukraine, rising long-term yields, over $40 trillion of national debt and a slowing housing market are temporary. More oil from domestic sources, Venezuela, Canada and new Middle East pipelines should bring prices down, rates should fall, and the S&P 500 and Dow should reach new highs in 2027. x.com x.comÂ
US stocks benefit when rates rise with growth because earnings outpace the drag from higher discount rates. Such periods have historically been very bullish, unlike inflation-led rate rises amid slowing growth. Since fall 2025 the 10-year yield rose from 4.1% to 5.1% while nominal GDP growth accelerated to 6.6%, faster than rates. Being long offers better risk/reward; high oil prices due to the war are the remaining inflation pressure, and an end to the war would improve the setup further. x.comÂ
Improving breadth and GPUs massively outrunning depreciation costs put US-equity risk/reward heavily in bulls' favour. Some 59% of S&P 500 stocks are above their 50-day average; the Nasdaq 100 is positive over five trading days, and small caps bounced off their 200-day average. Buy gradually, as the selloff may not be completely over. x.comÂ
US large-cap equities are vulnerable because earnings have not caught up with total market capitalization. The market is farther from its 200-week moving average than at any point in 18 years, and cracks are starting to show; staying bullish ignores these risks. Rate hikes remain possible, oil is still high, and yields may climb again, so now is the time for caution. x.com x.comÂ
The Iran war, rising oil prices and inflationary pressure do not yet look severe enough to trigger a major economic crisis. Despite some deterioration in the macro picture and short-term volatility, the broader picture remains relatively healthy and the long-term outlook for US large-cap and Nasdaq 100 stocks is very positive. x.comÂ
Strong corporate earnings make weekend crash panic a contrarian buying opportunity in US large-cap equities. Most individual stocks have already gone through bear markets despite the S&P 500 nearing record highs; weekend social-media panic rarely leads to a genuine economic downturn and instead offers long-term investors an attractive entry point. x.comÂ
US stocks face a tougher stretch ahead, warranting patience. A hawkish Warsh caused a bear flattening of the yield curve, and the 30-year yield recently hit its highest since 2007. A Fed hike on September 16 looks likely because the October meeting falls just before the midterms. September has the worst seasonality, midterm years are worse than normal, and bipartisan pushback on data-center expansion pressures AI infrastructure. A Venezuelan oil deal may lower oil prices near term. x.com x.com … Show more
Faster-than-expected US growth is encouraging for stocks, though inflation remains elevated. Q3 GDP rose 3.4% versus 3.2% expected, while the GDP price index rose 2.2% versus 3.2% forecast; PCE inflation matched expectations. x.comÂ
Broader participation, earnings growth and lower multiples support US equities into year-end, with seasonality also favorable. The equal-weight S&P rose 1.95% this week while the cap-weighted index slipped 0.05%; EPS is up 38% so far and multiples are down 17% year to date. The 10-year yield fell 41 basis points. x.comÂ
US equities look vulnerable to a significant correction before another sustainable rally: 3.4% inflation, roughly $100 Brent, a 5.2% 10-year yield and just 29K new September jobs contrast with fresh index highs, while the Magnificent 7 make up 34.9% of the S&P 500. Strong AI earnings expectations and liquidity could keep shares elevated longer than expected. x.comÂ
A breadth thrust and fresh buying point to at least a multi-week rise in US indices, most probably a big rally for a few months after the midterms. LS Breadth is flipping bullish as the bear count falls; more stocks are starting uptrends and first consolidations. The Nasdaq 100 is bouncing with strong breadth, and the S&P 500 looks ready to leave a massive base. The Nasdaq 100 could sell off at declining averages but should rise if broad selling does not return. x.comÂ
