- Experts are struggling to find a textbook explanation for 2023’s stunning economic boom and stock market rally.
- Many commentators instead turn to trendy catchphrases such as FOMO and YOLO to describe investor and consumer behavior.
- Here’s a roundup of the weirdest buzzwords used to comment on US stocks and the economy.
Many market pundits are at a loss to explain the surprisingly strong trend in U.S. stocks this year, despite numerous signs that the economy may be headed for recession. Even aggressive Federal Reserve rate hikes and bank turmoil failed to dampen momentum in the stock market.
Lacking classic textbook explanations, many commentators turn to a number of informal abbreviations to describe market trends. FOMO, YOLO and RINO are also part of it.
The rally began earlier this year following the shocking debut of OpenAI’s ChatGPT, which sparked a surge of investor excitement for tech stocks. That has pushed the Nasdaq 100 index up about 40% since the start of the year and the S&P 500 index up about 18%.
But the boom in the market is not just due to the AI ​​hype. Investors are feeling a mixture of FOMO (fear of missing out) and relief that the much-anticipated recession has not arrived.
At the same time, the US economy appears to be in surprisingly good shape. And according to Wharton University professor Jeremy Siegel, it’s up to YOLO consumers.
Here are some trendy catchwords that are widely used to describe and explain market trends in 2023.
FOMO
ChatGPT’s overnight success has caused investors to flock to companies seen as well-positioned to benefit from the AI ​​revolution. The buying frenzy, in turn, prompted even on the sidelines traders to jump on the AI ​​train, sparking fears of missing out on the rising market.
“I think the momentum and the fear of missing out on gains could drive the market higher in the short term,” Siegel said in WisdomTree’s weekly commentary.
The key question is whether it can be sustained.
“How long will this optimism and exuberance in the ‘AI bandwagon’ last? If we claim that it is largely driven by the liquidity factor, that means that such FOMO behavior can morph into a manic state that is grossly out of sync with economic reality, akin to the boom-bust cycles of similar tech narratives,” OANDA analyst Kelvin Wong wrote in a blog.
Reno
Let’s go there, bull and bear. A new breed of animal spirits may be driving the market right now. According to the new acronym coined by Goldman Sachs, what we are preparing is the RINO Rally.
Analysts at Swiss luxury bank SYZ said in a note: “Developed economies continue to be a positive surprise. Inflation has subsided and a soft landing now looks like a plausible outcome. This has led to the new acronym (courtesy of Goldman) ‘nominal recession’ (RINO).”
Given how resilient the economy has shown, it seems to suggest that the much-anticipated US recession is just a hypothesis, not a reality. And that’s bright enough for traders to buy into stocks.
Tina and Tara
Other ideas that have had some impact on the 2023 market include the sentiments of TINA (no alternatives) and TARA (with reasonable alternatives). According to The Wall Street Journal.
The first is the argument that investors should keep holding stocks. Because even if stocks were overwhelmed, there is no alternative asset class that would yield higher returns. On the other hand, TARA promotes the opposite. In other words, there are assets that are more suitable for investment than stocks.
Yolo
Siegel says a new group of spendthrifts are propping up the economy despite fears of high interest rates and a recession.
“The economy appears to be doing well and consumers are resilient against rising borrowing costs. That’s YOLO consumers traveling and enjoying the summer,” he told another weekly. Explanation of WisdomTree.
Rising interest rates usually encourage saving over spending, but the opposite is happening in the US, even after the Federal Reserve raised its benchmark borrowing cost by 500 basis points for five quarters.