New Bull Market, Or Social Unrest? | Peter Atwater

Should we be more worried about a social breaking point than a financial one?

In markets as in life, sentiment drives decision making.

And until sentiment shifts, the status quo will maintain. Even when at extreme conditions.

Today's guest has made the study of sentiment his life's work.

Which is particularly timely given that consumer confidence is registering concerning lows.

This is important because when it comes to the markets, as well as a number of other issues central to our way of life, we may be walking dangerously close to a tipping point where the prevailing sentiment suddenly reverses and the herd bolts in an unexpected direction -- potentially leading to sharp changes most will be caught unawares by.

So what do we need to be keeping our eyes on most closely?

To find out, we're fortunate to speak today with behavioral economist Peter Atwater, adjunct professor at William & Mary College, and author of the book  The Confidence Map: Charting a Path from Chaos to Clarity.

His key confidence indicators are telling him we’re in a time of growing tension; where the few at the top are doing better than ever and the many are increasingly struggling.

How will this resolve?

To hear Peter’s latest outlook, click here or on the image below:

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Adam’s Notes: Peter Atwater (recorded 4.30.24)

EXECUTIVE SUMMARY:

• Significant uncertainty in the global economic and financial landscapes currently exists, causing Peter to anticipate a major trend move from here, influenced by the "coiling" dynamics between bulls and bears in the market (“the status quo is unsustainable”). The challenge is, he can see the move being in either direction, so investors will have to monitor markets closely, and consider using hedges.

• Peter’s big message is that sentiment is approaching extremes. History tells him that when the vast majority expects a certain outcome, something else happens. Right now, confidence is high that inflation is sticky and interest rates aren’t likely to come down much. Should that prove to not be the case, that would surprise a lot of investors.

• Peter notes that the majority is increasingly struggling and becoming more and more angry about it, drawing parallels between current social indicators and historical periods of unrest, like the 1960s, suggesting that significant societal and economic changes may be imminent.

• To cool tempers off in the short term, reductions in interest rates and gas prices would boost market sentiment and alleviate consumer concerns, especially given current high levels of credit card APRs. But will this happen?

• Peter points out the conservative nature of the current AI boom compared to past frenzies like the DotCom bubble, noting that while it