What Wall Street’s Favorite Bear Expects In 2023

What Wall Street’s Favorite Bear Expects In 2023

Wall Street's favorite bear has good news and bad news. Ok, it's mostly bad news. Or, if that's too strong, it's fair to say that if Morgan Stanley's Mike Wilson is correct about what's ahead for US corporate profits, 2023 could be a very frustrating experience for market participants, albeit hopefully not as frustrating as 2022. I'll eschew the temptation to bury the lede for once. In Wilson's bear case, the S&P drops to 3,000 "sometime" in the first half of the new year, before recoverin
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5 thoughts on “What Wall Street’s Favorite Bear Expects In 2023

  1. I thought Albert Edwards was Wall Street’s favorite bear? Maybe that’s just me.

    Q4 earnings will be… I have no idea. Probably kinda like Q3. Q1’23 earnings will be the big one. That’s because the student loan repayment moratorium will have ended. That represents a demand destruction event the likes of which the FED only dreams they could engineer.

    Have you seen many (any) analysts mention that in their year-aheads? I’ve yet to see any mention of it in the main-stream press, not that I’ve been looking all that hard

  2. How much of that earnings comes from big tech? I think big tech will end up benefitting from the dynamics ahead. Wage pressure for good tech talent will be significantly reduced with the waves of layoffs hitting tech. Between the reduced wage pressure and cost savings from the layoffs, big tech has a heads I win, tails you lose dynamic and I expect them to perform quite well going forward. Economy has a soft landing? Big tech wins. Economy tanks along with rates? Big tech wins. The downside risk isn’t zero, but this seems like a great entry point to me.

  3. Tom Lee, of Fundstrat Global Advisers, perma-bull, CNBC favorite, and basically a clown, is calling for SPX 4400 by the end of the year and SPX 5000+ for next year.

    (He was calling for SPX 4800 by EOY in August and SPX 5100 in March.)

    Although he is easy to deride, his track record has been better than anyone else.

    Every time he’s wrong, you just wait 6 months and the Fed prints more money and then Tom Lee proves both prescient and brilliant.

    Is there any universe in which the Fed would truly tighten in a way to bring down stocks in a meaningful manner?

    QT right now is proceeding four times slower than QE post-COVID. Is Powell serious about inflation?

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