Weighing the Bull and Bear Cases: Understanding Market Dynamics

The article discusses the bull versus bear case for the markets. The bull case is driven by expectations of rate cuts, strong earnings growth in tech and AI-exposed firms, global liquidity, and strong flow dynamics. The bear case is driven by overvaluation, deteriorating breadth, rising risks of macro softness, and the possibility of momentum reversal. With bullish assumptions already reflected in current prices, the margin for error is shrinking and any misstep could tip the balance toward a decline.