Stocks Set To Drop Further Due To Margin Contraction, Warns Money Manager Peter Boockvar

Stocks have fallen for a number of reasons this year. But there’s another shoe that’s about to drop that should send equity prices even lower: margin compression.

Despite companies’ profits getting squeezed by higher input costs due to hot inflation AND rising costs of capital, Wall Street analysts are still projecting robust earnings growth for 2023.

Those estimates are going to have to come down soon in order to better match the unfolding reality.

Next month’s earnings

calls are likely to be the catalyst for that, as companies reveal the havoc this current margin compression is having on the current and future earnings.

So even if markets experience a short-term bounce over the next few weeks, it’s likely to be short-lived once the Street is forced to take margin compression seriously.

3-Way Crash In Stocks, Housing & Jobs? | DiMartino Booth

Yesterday we posted Part 1 of our interview with former Fed advisor Danielle DiMartino Booth.

In it, she warned that Fed Chair Jerome Powell is much more committed than most expect to doing “whatever it takes” to bring inflation under control. 

Here in Part 2, Danielle expounds on the pain that Powell’s demand destruction policies is likely to wreak on the financial, housing & jobs markets.

How large a correction is in store?

And what can/should we do today in advance?

For

Danielle’s counsel, watch Part 2 of our interview with Danielle DiMartino Booth.

A Lot Of Stocks Are Going To $0 | Wolf Richter

The S&P 500 officially entered a “bear market” an hour ago.

This is consistent with macro analyst Wolf Richter’s prediction of a hard landing for stocks, bonds and home prices that he shared in Part 1 of our interview with him yesterday.

Here in Part 2, Wolf returns to explain just how “hard” that landing is likely to be.

In this video, we also discuss what to do if you’re one of the many investors feeling caught like a ‘deer in the headlights’ by the losses in the

markets since the start of the year.

Paralysis is not a good wealth protection strategy, so we share a few strategies for getting “unstuck”.

Don’t miss out on watching Part 2 of our interview with Wolf Richter.