The financial markets are signaling a remarkably bullish outlook, with both stock and bond markets fully embracing a “run it hot” trade. However, this aggressive market pricing stands in stark contrast to the pessimistic views held by bottom-up analysts, companies, and economists, according to a recent analysis by Bob Elliott, CIO at Unlimited Funds.
What Happened: Elliott, in a detailed X thread, highlights this unprecedented “divergence” which he has “never seen” in his professional career outside of typical cyclical bottoms.
Following Tuesday’s surge in the equity market, market-based pricing of growth expectations has almost entirely recovered its earlier drop this year, now sitting just a few points off highs.
As highlighted by Elliott, this sentiment is reflected in large-cap 12-month forward price-to-earnings …