I woke up from a long nap with a clear, unbiased mind and came to a solid moment of clarity:
>>> Markets may fall into bear territory later this year (20%+ correction).
Interest rates have nowhere to go but up from all time lows and the Fed may lose control. As I have argued earlier this year inflation is creeping into everything. Now the market agrees and has responded by shorting bonds which causes the yield to rise. The Fed buys short term bonds to suppress this from happening. However, it cannot control long term rates as effectively (10 year bond).
Furthermore, during Powell's last Congressional testimony he agreed GDP growth may in the range of SIX PERCENT! The last time we had 5-6% GDP growth was the 1970's and the PRIME RATE wound up near 20% by 1979!!!
I am not saying rates will go that high. But with a projected 6% GDP growth rate, the 10 year bond at only 1.5%, what happens when it goes to 2% or 3%?!
The next round of pork barrel "stimulus" is due March 14th. After that date, look out below.
>>> The democrats are hell bent on raising income taxes
No matter what you think, the stock market has never met a tax increase it liked. Another SELL catalyst.
>>> As more people get vaccinated and return to work excessive jobs growth will "shock" the market
Great jobs numbers will cause further pressure on bonds resulting in a rapid growth in the 10 year rate.
TL;DR -
Based on projected abnormal GDP growth, rates will only go up from here. The market will react poorly as it has already. Assuming this happens it would be wise expect 20% or more correction. Another peril facing the markets is the specter of higher income and perhaps a new trading transaction tax. Yet another reason to be wary of a stock market selloff in 2021.