It's always a pleasure working with Maria. This time around I was in NYC meeting with client's when I stopped by to talk my trade strategy over the next year.
First, volatility didn't materialize which didn't shock me. August already saw major asset classes retest December lows. But, the S&P 500 didn't. I think traders ignored the other retests and thought the S&P 500 had to follow, and it didn't. Most people trade the VIX, which is tied to the S&P 500 - it's the details, right?
Second, I explain why earnings season will be fine: expectations were slashed this summer. Of course it will be fine! So strap in for a Santa Clause rally.
Third, what really raised some eyes (even mine) was my prognostication that earnings estimates are 30-40% too high for next year - specifically the end of the year. That could turn out to be very wrong if we end the trade war and have another four years of a pro-business US President. But then again, we are talking about the market rising on hope and a narrative of consumer confidence versus bottom line earnings.
The bottom line: expect the mostly likely scenario and be prepared for the opposite.