The S&P500 has rallied nearly 30% since the end of October last year to today, breaking through the 2022 highs of 4,825 with little trouble at the beginning of the year to enter a classic bull market movewhere we see a consistent breakout from the highs, with volumes falling consistently and the Vix moving from 22 to 13 in the same period.

This move has not been without emotions, with a Fed that at first marked the beginning of the rally, when it was already emphatic in saying that the contractionary or bullish rate cycle was over, but shortly after, finding ourselves with a Fed chairman who consistently calls for caution, as well as the rest of its participants trying to put cold cloths to the effervescence of the markets, with the Fed moving from 4 estimated cuts by 2024 to 3 cuts, but sending signals that are often confusing, pointing to perhaps a lower cuts scenario for this and next year. The investment houses most convinced of the expansionary cycle were even talking about 6 cuts for this year, views that have already been corrected on a couple of occasions. When the market is sensitive, these changes in the Fed's views are transformed into significant pressure on prices, a situation that has been far from happening in the markets across the board.

What explains this beautiful world in terms of prices that we are living in? On the one hand, we have seen upward earnings corrections in U.S. stocks, which has them trading from an estimated forward PU level of 25 at the beginning of the year to levels of 21.5 where they are now, which leaves room for further upside. This is in addition to a stock of money market that is over 6 trillion dollars, marking historical highs in parallel to stock market highs. To put in context, in 2008 after the avalanche of liquidity injected into the market, this indicator did not reach 4 trillion, then with Covid we reached 4.7 trillion, today in a more normal situation we are at this cash record, which makes corrections are very limited. The risks that continue to appear in this beautiful panorama are still the potential inflationary outbreaks, which cannot be completely ruled out, apart from the geopolitical risks that go hand in hand with inflation.

With all of the above, while the Fed will continue to put a cooler lid on the market's effervescence, we should remain in peak discovery mode, with a first test of this thesis when JPM reports results on April 12, we should remain in peak discovery mode, with a first test of this thesis when JPM reports results on April 12. There we will see if the earnings projections were well corrected upwards, giving room for the party to continue, recommending that corrections in the stock market be taken as a buying opportunity.

Jaime Achondo

Partner - General Manager of Corredora de Bolsa