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The Bear Case for 2026 (FT, Robert Armstrong)www.ft.com/content/d8aec181-3547-4c20-bfc8-a7a74b8fbda7
1061 sats \ 6 comments \ @denlillaapan 12h econ
Yesterday we got the "bull" case for 2026, and everything collapsed #1287287. Today, Armstrong tries to reverse his damage by calling the bear case for 2026.
It's an ingenious strategy: one way or the other, his remarks will look excellent in hindsight!
Unhedged does not think it is possible to predict the behaviour of an asset class over a 12-month horizon with a useful degree of specificity and accuracy. People who have done it consistently just got lucky.

"there is one bearish factor I have carefully excluded from my list. It is that stocks are very expensive."

...buuuut that doesn't help anybody:
It shows S&P 500 forward price/earnings ratios at the end of each year back to 1991, plotted against price returns for the subsequent year (so the dot labelled “1994” shows the 1994 year-end P/E ratio of 15.3 and 1995’s price return of 34 per cent)
Valuations, he claims, don't help anybody predict future returns
Bitcoiners cringe in painful agreement.
FIVE FACTORS that "scare me in the short term":
  1. Inflation: fiscal chaos, Fed reactions, surprise readings
  2. Nvidia crashes: apparently it's so goddamn important for the world so disappointments = bear market.
  3. Profit margins contract:
I used to be a big believer in the line that profit margins are mean reverting. I’m less sure of that these days. But I do believe the rule of thumb that it is very hard for the US economy to fall into recession or for a bear market to develop while corporate profitability is expanding.
  1. Alternatives: I mean, if you're pushing for THE UK (or, Lagarde style, Europe ugh #1020250) to take over the mantle from America, you're out fishing.
At some point, do the big, slow-moving asset allocators (pensions, insurance companies, sovereign wealth funds) decide that their massive structural overweight positions in the US could be trimmed a bit? Maybe around the time Nvidia falls out of bed?  
  1. Mr. Orange Man himself. " In the unlikely event that Taco (Trump always chickens out) becomes Tanco (Trump absolutely never chickens out) I expect markets to, well, tanko."
Oh well. I guess when we're done setting the value of our sats aflame we can go hang out with the rest of the collapsing markets. Fun times
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113 sats \ 0 replies \ @Scoresby 11h
The taco, tanco, tanko line is pretty fun.
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0 sats \ 3 replies \ @SwapMarket 8h
Profit margins mean revert the same way as S&P 500 keeps climbing. Because the losers die off and the winners join the statistics. Just buy a tracker ETF and chill for 20 years.
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0 sats \ 2 replies \ @Solomonsatoshi 7h
Ignoring the fat that USA cannot go to war or even sustain its high tech manufacturing (whats left of it) for at least the next decade at least without the rare earths China supplies. Good luck with that.
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66 sats \ 1 reply \ @fiatbad 3h
Doesn't matter if the world still views dollars as being the best, most stable, currency to hold and use for trade.
The USA can export its paper, and its inflation, and pretty much win any war via printing the money. Doesn't have to be China; we can buy rare earths elsewhere with our fancy money printer!
I say that somewhat tongue-in-cheeck, because I know that such a war would destroy America. They might be strong for a while, with nothing but money printing to back itself up... and trust in the currency would break down eventually.
The only question I have is: Why isn't trust in the dollar already breaking down? (or rather, breaking down so slowly). Even Bitcoiners seem to like dollars more than Sats, when the music stops playing. It's weird.
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0 sats \ 0 replies \ @Solomonsatoshi 3h
Well trump can see that others want to use other protocols than the petrodollar but he is using threats of tariffs and military force to prevent them choosing other MoE. That's not a free market approach - that's a dictator bully - that's Trump. Trump the insecure dictator bully trying to sustain the USA petrodollar empire by preventing others choosing other payment systems.
https://www.cnn.com/2025/07/10/business/brics-tariff-threat-trump
BTW print as much USD as you like China controls the refining of rare earths to such a high degree that USA cannot fight a war or manufacture most of the high tech products that it still can make without China supplying the rare earths essential to those products.
USA cannot buy refined rare earths anywhere else because nowhere else makes them in any significant quantity and will not for at least a decade.
China is already refusing to supply any rare earths to any potentially military end use. USA military is effectively crippled already. Great own goal bully Trump!
China has won the trade war- US military industrial combine is defeated.
Central banks are buying gold not USTs- they are in no rush as a gradual transition is preferable to a sudden collapse.
Iran and Russia already trade on the Chinese payment rails CIPS and mBridge and Saudis and others are joining them over the next few years. Steady as she goes- US empire is dying and Trump knows it.
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0 sats \ 0 replies \ @Solomonsatoshi 7h
Ignoring China. Who is this retard. That ignores China. It is China not the UK or EU that USA is racing to achieve AI dominance. It is China that has the advantage but lets ignore that too. AI requires massive electricity supply expansion- something USA is incapable of producing.
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