The excellent Michael Wilson of Morgan Stanley with his latest. This si all about the reverse bullwhip effect as pricing power evaporates just as demand hiccups.
Thoughts From the Road
Last week, we published meaningful cuts to our earnings forecasts that leave us 13% below the bottom-up consensus for 2023 S&P 500 EPS in our base case. While we have been more bearish than most all year on growth, we waited to make these cuts until a week ago to try and time when these forecasts are likely to begin falling in earnest. In our experience,getting too far ahead of the actual cuts isn’t all thathelpful as the market typically will not trade big earnings revisions until they actually begin. As we noted last week, we think that risk is now particularly elevated as we enter 3Q earnings season. We also noted that it may take until October for stocks to trade lower because more investors now share our view on growth going into a busy conference season and are somewhat positioned for it.
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