Stocks Set To Drop Further Due To Margin Contraction, Warns Money Manager Peter Boockvar
Wealthion, Released on 6/21/22
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.
Peter Boockvar is the Chief Investment Officer of Bleakley Financial Group and Editor of The Boock Report newsletter https://boockreport.com/.
Adam Taggart is the Founder of Wealthion. He is also Co-Founder and former President of Peak Prosperity. Adam is an experienced Silicon Valley internet executive and Stanford MBA. Prior to partnering with Chris Martenson (Adam was General Manager of our earlier site, ChrisMartenson.com), he was a Vice President at Yahoo!, a company he served for nine years. Before that, he did the 'startup thing' (mySimon.com, sold to CNET in 2001). As a fresh-faced graduate from Brown University in the early 1990s, Adam got a first-hand look at all that was broken with Wall Street as an investment banking analyst for Merrill Lynch. Most importantly, he's a devoted husband and dad.
Luke Gromen
Stocks Set To Drop Further Due To Margin Contraction, Warns Money Manager Peter Boockvar added by Herman James on 06/20/2022View all posts by Herman James ?+'