I'm bullish for all risk on assets including crypto. Here's why.

Originally wrote this as a comment but thought it would make a good r/cc post on its own.

I've been in the financial markets since 2007. When they bottomed in 2009 I thought no way is this the bottom. Everyone was talking about a double dip recession. Economic numbers were at their worst. How could this be the bottom? That's when I learned that financial markets for risk on assets tend to bottom when things are at their worst BUT the rate at which things are getting bad is slowing.

I think that's where we are now.

Everyone is expecting a recession. Markets don't price in what is happening right now if it's known ahead of time. Markets price in what is known when it's known, not when it happens.

https://www.conference-board.org/research/economy-strategy-finance-charts/CoW-Recession-Probability

Right now the expectation is for a recession, if a recession doesn't happen that's what will be the surprise. Markets aren't going to be caught off guard by a recession.

Core CPI is ugly. But the rate at which it's increasing has been decreasing for the last 4 months.

If we look at fed funds futures we can see the market is currently expecting further rate hikes the rest of that year. But the rate at which interest rates are expected to rise are also slowing down. Markets are pricing in modest rate hikes, not the jumbo ones we saw last year.

War has already broken out in Europe but now global markets have become pretty accustomed to the war. As long as the war stays contained with direct conflict between Russia and Ukraine it is hard for me too see it having too much impact for global risk on assets. Now if another country were to get involved with direct fighting then I think all bets are off. But right now a war in Europe is the status quo.

US dollar index is high but until the US dollar isn't the world's reserve currency and US treasuries aren't where the world goes when they are risk averse this is always going to be the case that the dollar is high when there's global economic uncertainty. We'll also see USD generally rise when the Fed is hiking interest rates and fall when the fed is loosening. Since the Fed is expected to raise interest rates over the next year I would expect the dollar to rise with it. I don't see a reason why it would correlate with risk on assets.

tldr: In summary I'm bullish. Why? Peak global uncertainty is behind us and we may not have seen the worst but we're now at the point where things getting worse is not as bad each time a new number comes out. We're near the top of the 'bad' curve. We might not be at the point yet where it has turned over but that upwards curve is flattening. It's here when historically markets tend to bottom. If new events occur that make either one of these statements not true I might turn bearish but right now I'm seeing what makes me bullish.