The stock market has become tariff-scare-proof now that the S&P 500 is only 2.3% below its February 19 record high despite Trump’s Tariff Turmoil (TTT) since then. After Friday’s better-than-expected employment report, the stock market has also become recession-scare-proof. According to Polymarkets, the odds of a recession were back down to 27% on Friday from a recent peak of 66% on May 1.

The stock market might become inflation-scare-proof on Wednesday, if May’s CPI inflation rate turns out to be as subdued as estimated by the Cleveland Fed’s Inflation Nowcasting, i.e., 2.4% y/y. On May 19 we wrote, “So the odds of our Roaring 2020s scenario is back up to 75%. In this scenario, the S&P 500 rises to 6500 by the end of this year. It could keep going to 7000 in a meltup.”

So, do we have nothing to fear but nothing to fear? That would represent much to fear, as fearless investors create meltups, which then become meltdowns. But in fact, the stock market’s sentiment gauges are showing plenty of fear, which is bullish from a contrarian perspective.

Perhaps we need to fear the next three quarterly earnings seasons? Since the start of this year, industry analysts have been sharply cutting their S&P 500 earnings-per-share estimates for Q2 through Q4. That’s even though Q1 turned out much better than expected. They must have been spooked by the guidance issued by many company managements since early this year about the possible negative consequences of TTT.

Then again, the 2026 annual consensus S&P 500 earnings-per-share estimate seems to be bottoming around $300 per share. If so, then S&P 500 forward earnings should rise to new record highs in coming weeks following a slight dip in recent weeks. (…)

So what could possibly go wrong?

Valuation multiples are now almost as stretched as they were at the start of the year. Trump’s tariff war may not be over, especially with China. The war between Ukraine and Russia may be about to turn even more apocalyptic. Stock investors might start worrying about the Republicans losing their thin majorities in the House and the Senate during next year’s mid-term elections. Up for grabs are every House seat and 35 Senate seats. Elon Musk could be the wild card that Trump never saw coming. There could also be a debt crisis caused by Trump’s Big Beautiful Bill.