Reality is starting to set in. We had this great January rally, but interest rates are going higher and staying there longer than perhaps the market was expecting. Morgan Stanley published a report on equity ratios stating that, adjusted for interest rates, stocks are probably at their most expensive since before the financial crisis. Multiples are at the high end, but interest rates are no longer at 0% to offset things. Earnings expectations are still a little too high. The bullish case for long-term investors is you want to stay the course, you don't want to panic out of it. He's probably more bearish now than he's felt in a while, but he still has 40-65% stock exposure, which is at the low end of his traditional norm. You don't want to run for the hills and get out of stocks altogether, but it doesn't hurt to have a little extra cash or to take some profits in some areas that have had a great move. In January, he made back everything he lost in 2022. Sometimes, the market hands you a little gift. Take it and step back a little bit. Energy, telecom, and the bond market still look OK.
In the shorter term, they won't stop raising rates until they get a crack in the inflation numbers. And you can't get a full crack in the inflation numbers until you get a crack in the economic data. It hasn't happened yet. The bullish case is that the economy will be OK through all of this, but no it won't because if it stays OK, inflation won't come down and rates will stay higher for longer. The economy and individuals are too financially levered to be able to absorb the sharpest increase in rates we've seen in monetary history. A year and a half ago, inflation was "transitory" and they weren't even thinking about raising rates.