Preaching To A Choir Of Bears
It almost feels gratuitous to keep making the case against US equities. It's preaching to a choir that increasingly includes most investors, from retail to institutional and everyone in-between.
I'd expect the bearish drumbeat to continue alongside hawkish Fed banter. "Whether the Committee would want to pull some proposed or thought-of policy-rate increases from 2023 into the December meeting, I think that's a judgment that's premature to make," Jim Bullard said over the weekend, on the sideli
Remember the bond and stock markets have discounted some of this. 2s are near terminal rates for example.
Thank you – I love articles like this; I’m not someone with specialized experience and knowledge – A macro view about valuations is very helpful. Would love to see this as a weekly feature. Have a great day
I wish I could find that article you wrote which gave the PE estimates which describes the SP500 st 3700, 3500 and 3300.
Maybe this one? https://heisenbergreport.com/2022/10/09/earnings-season-is-here-2/#comments
There is a search box lower-right of blog page, though it is hard to narrow down to any specific article.
Some bears are becoming more bearish, some are becoming less bearish, and some are unchanged.
I am on the “becoming less bearish” end. The SP500 is a -10% drop from my view of fair value (plus overshoot), many stocks look nicely undervalued, rates are close to Fed terminal target (1Y UST 4.5%, 10Y UST 4.0%), enough on FOMC are talking about lagged effects to suggest a pause around 1Q23, shelter CPI should start rolling over in 2 quarters or so, the stubborn resilience of US consumer / employment gives hope that the 2023 recession can be mild to moderate.
I think the bulk of investors seem to be on the “becoming more bearish” end. If true, that’s good.
Thanks jyl , I didn’t know about the search box
Food for thought… food to feed the masses is being stretched to the breaking point. Climate change with it’s drought, floods, and disruptive storms added to declining oceanic fish supplies and depleted farm fields means there is no longer an abundance of food. And it’s going to get worse. Where there is a short supply there will be a rise in prices as people compete for what they need to survive. This is not simply an inflation issue. No amount of raising interest rates is going to bring us back to an abundance of cheap food. Raising interest rates just makes it worse as more people have less money for food.
North America winter wheat planting is not going well. We need abundant Southern Hemisphere harvests.