You Just Witnessed a 7 Trillion dollar Stock Market Manipulation and it is FAILING!

(Bloomberg) — A sober warning for Wall Street and beyond: The Federal Reserve is still on a collision course with financial markets. Stocks and bonds are set to tumble once more even though inflation has likely peaked, according to the latest MLIV Pulse survey, as rate hikes reawaken the great 2022 selloff. Ahead of the Jackson Hole symposium later this week, 68% of respondents see the most destabilizing era of price pressures in decades eroding corporate margins and sending equities lower. A majority of the more than 900 contributors, who include strategists and day traders, reckon inflation has topped out. Still, a whopping 84% say it may take two years or longer for the Jerome Powell-led central bank to bring it down to the official long-term target of 2%.

In the meantime, American consumers will cut spending, and unemployment will climb over 4%. All these bearish sentiments underscore the deep skepticism held by investors in the face of an unexpected $7 trillion equity rebound of late. While stocks fell last week, S&P 500 has still trimmed its 2022 loss to 11% versus the 23% decline through its mid-June nadir. US futures have opened the week lower in Asia trading. “This is a bear-market trap,” Victoria Greene, founding partner at G Squared Private Wealth, said in an interview. “Inflation is the big, bad boogie man. Even if there really is a sustained decrease in inflation, it could take a while before prices actually come down significantly.”

The survey results spell trouble for dip buyers, who have re-emerged after the horrendous first half — driven by bets on a less-hawkish monetary tightening cycle while a slew of quant funds have shifted to a bullish positioning. In turn, shares around the world have clawed back some of the worst losses while the 10-year Treasury yield has fallen back to around 3% from the peak near 3.5% earlier this year. A fast pace of monetary tightening, and the resulting economic fallout, is the biggest risk for money managers all over the world, with interest rates a key driver of corporate valuations. The bad news, per survey participants, is that inflation will deliver a meaningful blow to margins, pushing stocks lower. While inflation’s effect on profit margins is very much an open question, the majority of MLIV readers appear closer to the bearish spectrum of a heated Wall Street debate on where stocks are headed. As elevated prices persist, consumers are likely to buy less during the next six months, a majority of respondents say. That’s in line with warnings from the world’s largest retailer, Walmart Inc., that soaring inflation is forcing shoppers to pay more for essentials at the expense of other discretionary items. A cutback in consumer spending would impose a clear drag on profits posted by S&P 500 companies, which are also grappling with higher wages, rising inventories and continued supply-chain problems in China. While the S&P 500’s margins peaked a year ago, the trough may not come until the fourth quarter, according to Bloomberg Intelligence. Consensus estimates for net-income margins have fallen about a half percentage point for both the third and fourth quarters since the start of this earnings season, with communication services, health care and consumer sectors among the weakest groups, BI data show. “It’s rare for the Fed to aggressively tighten policy without causing market volatility,” said John Cunnison, chief investment officer at Baker Boyer Bank. “Stocks aren’t wildly cheap right now, but they’re not as expensive as they were six months ago, especially growth companies.” NN: I saw trillion dollar buying from one investment bank after another….. Blew me away. I KNEW this rally back would fail and so said and so traded. The velocity of the buying and the volatility burnt my ass….. I never thought trillion dollar traders would be so stupid. Their loses has started and many players will be wiped out on this next wave down. Some of the dumbest trading by institutions i have ever seen. I got my ass handed to me. Their was just no way to get a handle on the numbers. No way of knowing how much they would commit and no way of trading without taking on huge risk on this biggest, sharpest rally back in the shortest period of time I have ever seen… It happens especially in great trades. We have now entered the next wave of the bear market and it i believe will give us new much lower lows in all stock market indices….