Good morning. When the top voices on Wall Street can’t agree on what happens next, at least you know the coming chapter is going to be interesting for markets.
The bulls and bears are out to play — let’s see who’s saying what.
For the third time this year, Goldman analysts lowered their year-end S&P 500 price target, this time to 4,300. The price cut is driven by sluggish growth and high interest rates, which have pushed beyond what the bank expected just a couple months ago.
Morgan Stanley, too, is anticipating a slowdown. Analysts led by Mike Wilson said negative earnings revisions are likely as economic growth eases, and that the stock market is set to fall as a result.
“The S&P 500 is still not priced for this backdrop,” Wilson said, explaining that his bear-case scenario is a 15% drop from current levels. The bank is cautioning investors not to be fooled by any rally, because more downside is coming.
But JPMorgan’s quant guru Marko Kolanovic is on the opposite side of the fence, and he’s sticking to the bullish forecast that he’s pushed all year. Specifically, he expects stocks to rebound because they’ve priced in too much recession risk.
“Equities stand to recover if a
doesn’t come through, given already substantial multiple de-rating, reduced positioning and downbeat sentiment,” Kolanovic wrote Monday.
In other news:
2. US futures rise early Tuesday. Cryptocurrencies were also up, with Bitcoin trading back above $30,000. Here’s the latest.
3. On deck today: Ark Restaurants, Home Depot, and Walmart, all reporting. Plus, look out for the US Retail Sales Preview data at 8:30 am ET. Also,
Board Chair Jerome Powell is speaking at the Future of Everything Festival.
4. A veteran fund manager shared how he’s beaten 96% of peers this year. Salem Abraham broke down his secrets to success as a mutual fund pro — and made the case for four of his top investing ideas despite seeing downside risk for stocks.
5. Elon Musk says Twitter deal “cannot move forward” until bot claims are proved. Musk tweeted that his $44 billion takeover of the company would not go ahead unless Twitter can prove bots make up fewer than 5% of its users. It comes after a Wedbush analyst suggested Musk was using a “dog ate the homework” excuse to back out of the deal. Here is the latest.
6. “Big Short” investor Michael Burry revealed his bet against Apple stock. Burry’s Scion Asset Management fund held bearish put options against 206,000 Apple shares as of March 31. Meanwhile, Ray Dalio’s Bridgewater fund sold its Tesla stake last quarter — and put new wagers on GameStop and AMC.
7. Morgan Stanley sees a 27% chance of a US recession in the next 12 months, up from 5% in March. Investment chief Lisa Shalett said surging inflation means investors are increasingly starting to expect a hard landing for the economy. Here are the other risks investors should look out for.
8. Rising oil prices are just a sliver of what’s to come, according to a 32-year veteran in energy markets. Climate policies won’t curb supply or demand, Anas Alhajji said. He shared the top three things investors need to understand in the face of an upcoming unprecedented energy crisis — and how to play the market.
9. Famed tech bull Dan Ives said investors should buy these stocks to make a diversified portfolio of future winners. These companies are set to emerge from the “massive overcorrection” that is slamming the sector, the Wedbush analyst said. See the 22 stocks he’s eyeing right now.
10. Diesel markets are “telling us there’s a shortage.” Supply of low-sulfur diesel is dwindling and struggling to keep up with booming demand. In the Central Atlantic region, inventories have crashed to 78% from 2020 to their lowest in a decade.