There are a few signs in the market that point towards an end of the cycle: (1) small caps, a very good proxy for the wellbeing of the real economy have not participated in the rally since the end of 2022.(2) 70% of CMBS are interest only.(3) Corporate earnings are departing from price, with soft top line growth. (4) market breadth is poor and (5) the smart money is selling or simply not buying: Jeff Bezos has sold $8Bn of Amazon stock in the first weeks of the year, and Warren Buffet holds $167Bn of cash in Berkshire Hathaway waiting to be invested, and historical maximum. Are we waiting for the straw that will break the camel’s back?
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