the bears are back with a WORSE warning

we got to cover the bear case because

that's what we do here we cover the bull

case we cover the bear case I give you

my opinions you're supposed to form your

own yes I run an actively managed ETF

yes I'm a licensed financial advisor yes

I have a real estate uh startup and yes

I get made fun of for flying around in a

private jet but that's because they

don't have a private jet now we need to

talk about the bear case because that's

very important so what are we getting

from the Bears well we're getting a few

different things number one Morgan

Stanley our favorite bearer of all Mr

Mike Wilson

what does Mike Wilson have for the bear

case today what's the bear hopium if

you're short selling what's the cocaine

bear that you can sniff on today because

we just gotta get some more bad news

even though I don't necessarily believe

in the bad news I'm gonna pay attention

to it because I always give Credence to

people of different perspectives let's

listen to Mike Wilson

although this bear Market has been

mostly about inflation and the fed's

reaction to it and higher interest rates

the depth and length of most bear

markets are determined by the trend in

forward earnings on that score the next

12 months of earnings per share

estimates have started to flatten out

which has provided some investor

optimism oh a flattening of forecasts of

earnings that sounds good right uh oh

wait no not so fast during bear markets

next 12 month earnings per uh per share

estimates typically flatten out between

quarterly earnings Seasons before

resuming their downtrend

oh well that sucks if you're a bull and

that's great if you're a bear in fact

take a look at this and I have to give

them some credit this chart probably the

scariest chart that I've seen in terms

of shorter term trading and who knows

maybe this year we'll just Echo what we

saw last year but take a look at what we

got over here pattern of last year

suggests March is a high risk month for

stocks to Discount the next round of

cuts

okay so what does he show us well take a

look at this the blue line here is the s

p 500. the yellow line shows you the

discounting of the next 12 months of

earnings now what I'm going to do is I'm

going to take and I'm going to make this

a little simpler for us okay I'm going

to take a green highlighter and I'm

going to show you where the next 12

month earnings get cut okay ready for

that here we go that would be about

uh looks like last year somewhere around

between June and July

over here we have somewhere between

October and mostly October over here you

see those earnings getting cut and then

you see earnings projections getting cut

over here January and uh February okay

so when does the stock market decline in

anticipation of the green slopey Dopey

going down when does the stock market

start getting sad well the stock market

starts getting sad about a month before

that look at that stocks discount the

earnings season in the last month of the

quarter so you get this massive decline

over here in the last month of uh of Q2

2022 massive decline over here in

September the last month of Q3 uh you

get the this massive decline in the last

month of the S P 500 of Q4 which is

December so it looks like you have about

a one month lead where what's been

happening is earnings forecast get cut

and stocks sniff it out about a month

earlier and guess what we're in March uh

well we're about to be in March we're

two days away from March uh maybe March

is actually at high risk of this

earnings decline again unfortunately

Mike Wilson is making an argument that

this time is going to sound just like

2022 is actually a pretty decent bear

argument I have to say when Mike Wilson

started talking about how the market was

basically running out of oxygen and it

was kind of like we were climbing Mount

Everest I had a little bit of this

opinion that the Bears were running out

of bearish things to say and reasons to

complain about the market that they were

basically running dry and they had to

start coming up with crazy things

you know this is not that terribly crazy

it's certainly better than we'll look a

little bit more of what Mike Wilson says

but it's certainly a little bit better

than what Mr Robbo Bank over here has to

say so you've got another mic I don't

know what it is with mics and bears here

but this guy's basically saying hey

um the bull strategy right now is a

Kamikaze strategy Listen to listen to

some of the Jade and you got to give him

credit I mean he's right about to have

this Jade all right listen to this

in 2021 inflation was not going to

happen then it Rose sharply but it was

called transitory

in 2022 inflation was not going to soar

nor were rates going to rise

than it did and rates roast in 2023

disinflation and a rates pause was

coming and then a rates pivot loomed

yeah then we got hot data in January

followed by a really bad pce numbers and

all of a sudden nobody pricing Cuts

anymore for 2023.

uh unfortunately you have to kind of

give him credit for that Jade it's kind

of right about that and he's not wrong

that you've got people like Larry

Summers now calling for a six percent

fed funds rate really the way to be

bullish is to say well the market

doesn't so much care about whether it's

5.4 on a feds fund rate fed funds rate

or six percent the market cares about

not getting Paul volckert right that's

your bull argument that no the

disinflation will come we don't so much

have to worry about uh about any of this

this whether we're ending at 5.4 or 6 or

whatever we just have to worry about

getting Paul volcker but he does end up

making the argument here the idea that

the fed's going to Pivot uh looks like a

Kamikaze strategy that the reality is we

might end up having the price in a six

percent fed funds rate right now we're

only sitting at 5.4 price stamp you've

also got uh more pain potentially coming

from China and Russia you've got to pay

attention to the geolip political risks

of China arming Russia all right like

the Bears are trying to grab whatever

bearishings they can some of the things

though they're not terribly wrong about

like these are definitely bearish

arguments that we should pay attention

to Mike Wilson goes on to say hey look

this this rally that we saw in in

January and February is a bull trap and

they think the technicals are going to

be straight up wrong even though we

broke the 200-day moving average he

thinks that is wrong take a look at his

chart he gives us a chart here somewhere

here we go take a look at this first the

DOW Industrials made its high on

November 30th but it's very close to

taking out the December lows with

Friday's close and if the economy was

about to re-accelerate wouldn't this

classic late cycle index be doing better

in other words if things were going to

go better why is the Dow basically about

to take out some of its lows uh from

from December also speculative stocks

are starting to underperform again and

he's also right about this a lot of

companies that have reported earnings

like SAS companies Airbnb whatever have

actually sold off after their earnings

because companies or people maybe are

taking profits or they're they're

hedging last week I said Friday was

going to be a really good tell after the

hot pce data was the market going to

close red or green and that would tell

how much fear there actually is for

inflation if we close green nobody

really cared about PC well we closed

pretty dang well red decently read on

Friday and so a suggestion that yeah

Market still is worrying about inflation

here uh and so maybe maybe the warnings

that the Kamikaze guy and Mike Wilson

are giving

are something we want to pay attention

to now again they're not necessarily

what I believe in while I agree with

them Mike Wilson I completely agree that

valuations on the S P 500 are ridiculous

I think it's stupid I'm sorry that

probably offends a lot of people but I

think it's stupid to bet on just solely

the S P 500 I understand it's a

diversification tool but for me for my

personal strategy this is not for you my

personal strategy it has it's way too

overweight Staples and sectors that I

believe did very well in 22 that won't

do well in 2023 but it's not just Mike

Wilson and Morgan Stanley or the robot

Bank on it's also Barclays Barclays

actually gives us some idea of how bad

could things get so they talk about us

potentially having to reprice in more

hawkish fed path the valuations are

still high but look at some of the

scenarios they give here they talk about

in a soft Landing scenario we have a

four and a half percent upside okay

that's the upside for the S P 500 where

we sit now just 4.5 half percent that's

your upside four and a half percent

that's it okay then the bear case a

normal recession negative 18.6 percent

yikes on the shallow recession negative

6.2 so clearly the Bears are setting up

based on their data for much more

bearish likelihoods than bullish

outlooks now I like to be contrarian and

when I was super bearish a lot of people

were super bullish that's when I sold my

stocks in January of 2022 it's also why

I sold all my real estate and Q well

almost all my real estate uh like 85 of

my reels hit over 20 million dollars of

real estate dumped uh stuff I own myself

not with Partners or anything just

myself my wife uh in in the first

quarter of 2022. now yeah sure did I buy

back into some uh what I thought were

recession resistant Tech and growth

stocks uh and pricing power stocks a

little too early absolutely not

suggesting I timed it perfectly on both

ends absolutely not my point is I like

to be contrarian and boy there's a lot

of institutional bearishness right now

and I really think they're hedging for a

Paul volcker scenario and even if

interest rates go a little bit higher

with the fomc personally I don't see

myself that terribly bearish I think

we're on the path of massive

disinflation it's just going to be a

game of patience probably not going to

hit as fast as we think but things are

going to be as bad as the Bears are

suggesting suggesting maybe for the S P

500 of Staples but for some of the

pricing power stocks that have already

had some of their pain in 2022 whether

those are chips energies uh you know

automakers certain automakers obviously

like a Tesla and face Nvidia Intel uh

you know TSM asml

solar Edge

I don't think so I don't believe so

because I think these are industries

that are benefiting from massive stemi

checks and from government bailouts

whether that's the inflation reduction

act or the chips act or

from

the fact that they have low debt unlike

a lot of companies that are heavily

indebted in fact I have a piece here on

heavily indebtedness uh that's worth

noting here's JP Morgan talking about

pricing power you know me I'm a big fan

of pp right big big big fan of pricing

power the costs of rates remaining

higher for longer are not only demand

Destruction for housing durable goods

discretionaries but also lower margins

of roading pricing power and higher

interest rate costs but look at this

jump on over to where the most debt

seems to be it seems to be if we look at

the chart on the right side for debt

maturity and refinancing risk that's

going to be this column that I'm sort of

highlighting there on the right side

you're looking at the highest sectors

for debt and the companies that I choose

have specifically a low low debt the war

sector right now look at this food and

Staples retailing highest levels of debt

now you do have technology and Hardware

equipment this is going to be like your

your more like your Corsair your Ford

your GM very very high levels of debt

semiconductor is actually not that bad

Tesla very very low debt Telecom media

and entertainment low depth the SAS

sector not that bad either automobiles

components retailing not that bad

Transportation not that bad but it's

really again Staples and food and even

household and personal products these

are the ones that are heavily heavily

and edit so maybe sectors that we got to

pay attention to but anyway this is the

kind of research that I try to do on a

daily basis to provide as much insight

and perspective onto what's going on in

our world and look the Bears have an

argument but uh that doesn't mean you

necessarily have to align with them but

it gives you an idea about a bearish

sentiment and what's going on with with

the Bears uh I personally think uh you

know as Elijah here in the comments says

bears are a little too heavyweight on

the Staples and uh and certainly the

broad-based indices although it even

seems like they're bearish on the broad

based as well