🔎August 2026 Market Strategy
Momentum keeps momenting. Who’s gonna stop it?
In my July 2026 Market Strategy, I pointed to cracks in the AI Trade and the Debasement Trade. I expected that these cracks would likely soon open further alongside weakening GDP growth and falling interest rates, which would then rotate investor capital from B2B stocks to B2C stocks. Let’s see how the picture has evolved since then.
TLDR Summary
The cracks were no cracks. The consolidation in July was an isolated event to empty the bags of Leopold Aschenbrenner. Therefore, the party quickly resumed once he was out.
Interest rates, earnings growth expectations and overall risk appetite keep rising. Fiscal liquidity creation remains as a strong underlying current to fuel the bull market. On top of that, corporations are creating additional liquidity by selling equity and debt, which is then used to grow earnings and attract further demand for their capital. Actual demand from real people buying real products remains secondary.
The biggest risk for this bull market may be the absence of a bear argument that is compelling enough for a crucial number of investors to get onboard. Such an argument will eventually emerge. Until then, holding unpopular assets will be akin to an insurance policy with opportunity costs being the policy premium.
