Did you know that bond prices move inversely to yields?

When bond prices rise, yields fall, and vice versa, meaning that this relationship is crucial for understanding market movements and investor behavior.

Here’s what you can expect in this issue of Equity Eats:

• Update On The War: First, the Biden Administration's unclear stance on the Israel-Gaza conflict has left many puzzled 🤔

• One Bear Standing: Next, while Wall Street enjoys a bullish run, one prominent bear, JP Morgan’s Marko Kolanovic, is doubling down on his negative outlook for U.S. equities 🐻

• Want To Know What’s Next For Stocks? Finally, we’ll break down what to keep an eye out for and what it means for future market movements 👀

Stay tuned for expert insights and analyses that can help guide your trading decisions in these volatile times!

Update On The War 🤔

The Biden Administration is confused.

Last week, Team Biden announced they were cutting off arms shipments to Israel, its closest ally.

This week, behind closed doors, it may be sending signals to Israel that it has Biden’s reluctant blessing to finish Hamas off in Gaza.

It’s impossible to guess what they will decide next 🤷🏻

There is no doubt that there are anti-Israel ideologues in the Administration who are pressing Biden to try to force Israel to end the war.

And there are others who think that forcing a ceasefire is Biden’s clearest path to an election victory 🗳️

One Bear Standing 🐻

Pessimists on Wall Street have had a tough run as the market chases one high after another.

But one prominent bear is still holding firm.

JP Morgan’s Marko Kolanovic doubled down on his negative stance on U.S. equities this week, shortly after Morgan Stanly’s Mike Wilson gave up on his bearish outlook.

Kolanovic said he doesn’t see stocks as “attractive investments” and there’s no reason to change that view at the moment ❌

He expects the S&P 500 to drop to 4,200 by December from the index’s current level of over 5,300.

The strategist could be swinging the wrong way again; he was incorrectly bullish in 2022 and bearish in 2023.

Plus, the market so far has shown no signs of exhaustion 📈

This bull market, which began in earnest in late October 2022, has driven the S&P 500 to new records more than 20 times.

While Kolanovic is now a lonely prominent bear among the big Wall Street firms, Citigroup’s Scott Chronert and Goldman Sachs’ David Kostin have targets that are lower than current levels, at 5,100 and 5,200, respectively.

But these targets point to a moderate sell-off or cooling rather than a bear market 🧾

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Want To Know What’s Next For Stocks? 👀

Watch the yield on the 10-year US treasury bond.

The Dow’s march toward 40,000 in recent weeks coincided with yields falling by 30 basis points, from 4.70% to 4.40%.

As long as yields keep heading lower, that should be good news for stocks 👍

And yields will move lower as inflation moderates in the months ahead.

Look for lower bond yields and a higher stock market in the months ahead 📅

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