Meet Kevin onSPYS&P 500 / SPDR S&P 500 ETF

Kevin relays Goldman Sachs' warning that AI-related depreciation drag and fading 'other income' from equity gains could slow S&P 500 earnings growth starting in 2027, creating headwinds over the next 12 months. Despite this caution, he remains bullish on the index for the next six months, citing low investor leverage and absence of euphoria as bullish signals.

Kevin believes the SEC's tokenization rule change will pull crypto-holder liquidity into US equities by letting them leverage crypto against stocks without selling, while also removing shares from stock-market float via tokenization. He frames this as a broad, multi-month bullish catalyst for the entire stock market.

Kevin believes the market has passed through its worst fear-driven selloff tied to the Iran conflict and rate hikes, and expects conditions to improve into the election period. He frames this as the basis for his 'buy the dip' alerts sent to subscribers.

Kevin frames today's Fed decision as the key driver for the S&P 500, arguing that market reaction hinges on how much forward guidance Fed governor Kevin Warsh gives about the neutral rate rather than on whether a hike itself occurs. He expects a 25 basis point hike is already priced in, and believes the market could rally more than JP Morgan expects if no aggressive forward guidance is given, but could fall if Warsh signals rates need to go materially higher.

Kevin argues Trump's recent shift toward de-escalation with Iran, a Russia-Ukraine energy infrastructure truce, and softer rhetoric on the Fed all point toward a 'buy the dip' setup. He believes fear around rate hikes is overpriced and that a combination of falling geopolitical risk and resilient AI earnings could push markets toward euphoria.

Kevin warns that if the Fed does not hike, loss of credibility, rising term premiums, and stagflation concerns could cause the stock market to 'derate' and potentially roll over with severe economic consequences. However, his base case is that the Fed will hike, the market will get over the recent AI IPO drama, and the dip will be a buying opportunity.

Kevin sees the S&P 500's current red futures as temporary noise driven by Fed rate-hike odds, delayed Iran talks, and Anthropic IPO jitters, expecting recovery into the midterms and a historically strong stretch afterward. He frames current weakness as a dip worth buying.

Kevin argues that fear around rate hikes, oil prices, and a potential AI slowdown is already priced in, calling this 'peak fear.' He believes the S&P 500 is being held back despite strong capex, financing, and earnings, and should break through 800 by year end.

Kevin expects the strongest stock market gains through the end of 2026, especially post-midterms, but anticipates more resistance and a harder environment in 2027, prompting a shift toward lower-beta, quality cash-flow businesses. He partially agrees with a Wells Fargo strategist's caution on hardware/capex but pushes back on the idea that the broader index will crash.

Kevin reports JP Morgan's near-term tactical caution on stocks due to Fed meeting risk, credit spread widening, and heavy issuance, but he personally maintains a bullish bias on his own 1-10 scale and expects a bullish squeeze into year-end, especially after the midterms, citing historically strong post-midterm seasonality.

Kevin remains cautiously bullish near-term on his personal 'Bear/Bull scale' at 7.1/10, citing continued economic spending and earnings growth, but warns of a longer-term bubble risk building from high rates, high oil prices, and AI spending excess. He believes the Fed will eventually be forced to print money once a recessionary/deflationary environment sets in.

Kevin expects the S&P 500 to keep extending gains over the next six months once Jackson Hole uncertainty clears, pushing back against Bank of America's bearish year-end target. He frames the Fed's Jackson Hole remarks as a near-term catalyst for continued upside.

Kevin argues that Fed officials like Miran and Waller are politically motivated to avoid a rate hike before the election, and that Jackson Hole will likely be a non-event or dovish 'clearing event' that lets markets rally. He believes the base case is no hike in September and that stocks should move higher once the Fed event passes.

Kevin argues the market has been depressed by a 'great suckening' of capital via huge corporate raises (Google, SpaceX, Meta) and higher yields, causing a leverage unwind in ETFs and memory stocks. He expects this deleveraging to end around August 3rd, making him short-term bullish on a bounce, while remaining longer-term cautious due to a decaying labor market that markets aren't yet pricing in.