In his Daily Market Notes report to investors, while commenting on bearish sentiment, Louis Navellier wrote:
Bear Growling Louder
Bearish sentiment is sky-high. Outside of energy, almost every other sector is under assault as the market continues to fall. So far, it’s primarily P/E compression driven by higher interest rates which are rising due to central banks around the world tightening monetary policy to address rising inflation.
Q1 2022 hedge fund letters, conferences and more
The lurking fear is stagflation of embedded inflation and a slowing global economy, which will lead to analysts cutting forward earnings estimates. Right now, the market is taking no prisoners; even energy opened in the red today as crude is down 2% and natural gas is down over 5%.
The 10-year US Treasury hit a high of 3.30% early and has now pulled back to 3.12%. The high-yield bond market, often seen as the canary in the coal mine for credit risk, last week had its worst week in over a year. Crypto is down over 4% today and is revisiting its low for the last 12 months.
Attractive P/E?
Market pundits were commenting that P/Es will become attractive again when the S&P drops to 16X, which would be approximately another 10% drop under current earnings expectations. Several long-term technical trend lines are being challenged or broken, adding more fear as forecasts for the next levels of resistance are difficult to define.
The very strong US dollar is also causing concerns for US companies with substantial international earnings.
Hit hard this morning was Rivian (NASDAQ:RIVN), an electric truck company that has Ford Motor Company (NYSE:F) & Amazon.com, Inc. (NASDAQ:AMZN) as investors. It's down 15% as the lockup of insider selling expired over the weekend when it was revealed that Ford was selling 8 million shares.
Blood on the Street
It is times like these when the logic of the best to buy when there's blood on the street will truly be tested. There are positive things to look forward to: A resolution in Ukraine, the end of the Covid outbreak in China, and evidence of cresting in inflation trends would probably be the best news.
The fact remains that US companies and the economy overall still have positive growth forecasts, the job market is very strong, both consumers and companies are flush with cash, and it's politically unlikely the central banks will remain aggressive if economies falter meaningfully.
When the bounce comes it should be very strong, but the timing remains quite uncertain.
Coffee Beans
A Texas antiques dealer bought a bust for $34.99 from a thrift store and later learned it was a 2,000-year-old Roman relic. The bust was found to have been listed in a 100-year-old catalog from a German art museum and apparently was brought to the United States by a World War II soldier. The piece will be displayed at the San Antonio Museum of Art for one year before returning to Germany. Source: UPI. See the full story here.
