Commentary
Despite all the fanfare and cheerleading you hear in the MSFM, the recent bounce in equity prices has just been a rather pedestrian bear market rally. Bull markets are not engendered by a faltering global economy, very high rates of inflation, and the most hawkish global central bank tightening cycle in history.
In spite of these dynamics, stock prices have now completely priced in a perfectly soft landing for the U.S. economy. How else would you characterize trading at 17.5 times 2023 S&P 500 ebullient earnings estimate of $245, according to FactSet. Keep in mind the $6 trillion of helicopter money ended in 2021 and earnings growth for Q2 2022 is negative 4 percent, excluding the energy sector. However, Wall Street is still projecting an increase of 50 percent for 2023 EPS from the pre-COVID level….