Investors should ‘buckle up’ for long slowdown: Investment strategist
Piper Sandler chief investment strategist reveals when markets will bottom, previews Q2 earnings season
Piper Sandler Chief Investment Strategist Michael Kantrowitz reveals when he believes markets will bottom.
Michael Kantrowitz, chief investment strategist and head of portfolio strategies at Piper Sandler, warned on Thursday that investors should "buckle up" for long slowdown.
He also provided insight into what to expect from second-quarter earnings, arguing that an increasing number of "misses" are expected.
Kantrowitz provided the insight on "Mornings with Maria," Thursday, following mixed results from JPMorgan and Morgan Stanley as the second quarter earnings season kicked off.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 248.55 | +3.79 | +1.55% |
| MS | MORGAN STANLEY | 134.69 | -0.29 | -0.21% |
On Thursday morning, JPMorgan Chase reported a fall in second-quarter profit as America's largest bank set aside more money to cover potential losses in the face of growing risks of a recession.
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Morgan Stanley reported on Thursday that profit in the second quarter dropped 30%, falling short of analysts' expectations for the first time in nine quarters, as its investment bank suffered from a slump in global deal-making.
Michael Kantrowitz, chief investment strategist and head of portfolio strategies at Piper Sandler, provides insight into what to expect from second quarter earnings, arguing that the impact of rising interest rates will be noticeable.
"We are expecting an increasing number of misses on both top line and bottom line in this quarter’s earnings season," Kantrowitz said on Thursday.
"We are really going to start to see the impact of the last year and a half’s worth of rising interest rates, rising oil prices, heck, rising everything that is now starting to weigh on economy."
He noted that the stock markets have dropped during the first half of 2022 "largely because of rising rates."
Michael Kantrowitz, chief investment strategist and head of portfolio strategies at Piper Sandler, provides insight into what to expect from second quarter earnings season. (Reuters/Mike Segar / Reuters Photos)
He then warned that the "market is going to continue to struggle" for the next 15 months due to slowing economic growth, slowing earnings and rising unemployment.
Other large U.S. banks including Citigroup and Wells Fargo will report second-quarter results on Friday, while Goldman Sachs and Bank of America will report next week.
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Stocks fell broadly in morning trading on Wall Street after the higher-than-expected inflation data was released the day before, causing investors to brace for another big rate hike from the Federal Reserve later this month.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 44296.51 | +426.16 | +0.97% |
| SP500 | S&P 500 | 5969.34 | +20.63 | +0.35% |
| I:COMP | NASDAQ COMPOSITE INDEX | 19003.651134 | +31.23 | +0.16% |
Kantrowitz argued that he doesn’t believe "leading indicators of the economy are going to bottom out until late next year," which he noted is what "usually turns the stock market around."
He noted that, so far, most of the "pain" has been in the housing and retail sectors, "and so that’s where the initial weakness is showing up."
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"But the impact of higher rates and higher oil, and the tightening of the Federal Reserve, [as well as] other central banks that are still tightening interest rates, that’s really not going to show up until, later this year, and throughout next year."
Reuters contributed to this report.