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Josh Brown, CEO, Ritholtz Wealth Management

Portfolio > Economy & Markets

Bear Market May Have Hit Low: Josh Brown

By Dinah Wisenberg Brin

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This year’s bear market may have experienced its low point already but isn’t likely to overcome all its losses anytime soon, investor Josh Brown suggested Tuesday.

“My take is it’s possible that the lows for this bear market are in but that we don’t get anywhere near the high and we spend the next three to six months chopping around as the economic data starts to decelerate and the earnings cuts for ‘23 start to take hold,” Brown, Ritholtz Wealth Management CEO, said on The Compound live-streamed webcast.

“We said the V-shaped recovery is dead, it died already earlier this year, I don’t think it’s coming back,” he added in a conversation with Ritholtz Wealth financial analyst Michael Batnick after market hours.

Brown cited a new Goldman Sachs note forecasting that a key inflation metric, core personal consumption expenditures, will be cut in half over the next year to 2.9% by year-end 2023, “and if that ends up being even close to what happens, it’s a pretty good setup for most areas in the market.”

“It might not be the best setup if you need Fed rate cuts to make your stock thesis work but it’s a pretty good setup for most investors,” he added.

Brown said “we’ll have to see about” the “higher for longer” idea, apparently a reference to the notion that the Federal Reserve will keep interest rates elevated to fight inflation.

“But if the economy really doesn’t melt down and we can tolerate these higher rates, then basically we’re left with this tug-of-war which is just-OK earnings growth or lack of earnings growth, possibly, and multiples that are not that low historically” relative to the past five years, Brown said.

A cooler-than-expected Producer Price Index report Tuesday confirmed market enthusiasm for last week’s Consumer Price Index release, which showed more moderate price increases in October than anticipated, Brown said. Meanwhile, the recent decline in the dollar from its high this year may signal to stock investors that the Federal Reserve could be nearing the end of its tightening cycle, he said.

Investors now anticipate the Fed will “take its foot off the brake a little bit” and raise the benchmark interest rate by 50 basis points in December, rather than the 75 basis points that had been widely anticipated before the most recent CPI report, Batnick noted.

The S&P 500 has to rally a little over 20% from its Tuesday level to reach a new high, Batnick said.

Dinah Wisenberg Brin

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