Last month I concluded with the comment;

Hope still abounds, hope that inflation will subside, hope that interest rates will fall and hope that growth will continue or resume. This is not the backdrop seen at major long term buying opportunities.

This is still very much the case, and is perhaps understandable given the magnitude of the rallies that have been seen since October of last year. Nonetheless, investors should be reminded that renewed, and in some cases extreme, optimism are not found in the early stages of a new bull market. In its early stages a new bull market is generally dismissed as just being another ‘dead cat bounce’, just like all the other failed rallies that have fallen short throughout the preceding bear market.

This current rally may be the best that has been seen for some time, but mood and expectations were never what would be expected to be seen at a bottom at the lows last year and this is perhaps why so much hope has so quickly rushed back into the market.

In this edition of Strategy Thoughts I review the evidence supporting the case that this is just another ‘dead cat bounce’, and further revisit the futility of waiting for a Fed pause but raise the optimistic possibility of a very different kind of Fed pause actually being constructive for investors. But that pause still lies some way in the future.