Jeremy Grantham is predicting that stocks will tumble again and that the S&P 500 will plunge by another 25%. Grantham told the AP that he estimated the S&P 500’s fair value in a year would be around 3,000 and emphasized it could trade below that level for several months. In other news, Goldman Sachs CEO David Solomon thinks inflation won’t subside soon; however, he’s hoping it will within the next 24 months.

 

Business Insider/Theron Mohamed
Bubble expert Jeremy Grantham predicts weak earnings will hammer stocks – and warns the S&P 500 could plunge another 25%

Jeremy Grantham warned a looming slump in corporate profits would send stocks tumbling again, and suggested the S&P 500 could plunge by another 25%, in a recent interview with the Associated Press.

“Of course earnings will now come down,” the veteran investor and market historian said. “The big second shoe falls where earnings decline,” he continued, noting the first shoe was the compression of valuation multiples for stocks.

Grantham estimated the S&P 500’s fair value in a year’s time would be around 3,000, and emphasized it could trade below that level for several months. The benchmark index has already sunk by 18% this year to around 3,940.

Continue reading, here.

 

Bloomberg via ZeroHedge/Vincent Cingarella
“If The Fed Pivots Sooner Than Most Think, The Second Half Of 2022 Risk Rally Will Be Enormous”

The Fed is hiking blindly into an economic downturn, putting pressure on risk assets unnecessarily.

The good news, with cash levels at the highest since 9/11 and equity allocation the lowest since the Lehman collapse, if the Fed stops sooner than many think, the second half of 2022 risk rally will be enormous (ZH: and they will: according to Michael Hartnett, the Fed will pivot in November, while Marc Cabana says QT will end well ahead of schedule).

Housing and retail began to turn lower in October of 2021, retail likely as wages failed to keep up with inflation and housing due to higher prices and less inventory. That trend continues into this year, possibly leveling off in June before likely resuming a turn lower.

Keep reading, here.

 

Yahoo News/Brian Sozzi
Goldman Sachs CEO on inflation: ‘Economic conditions need to get tighter’

Goldman Sachs CEO David Solomon thinks it may be a bit before hearty levels of inflation in the country subside, but he is hopeful they will within the next 24 months.

“I said this yesterday on my earnings call that inflation is deeply entrenched,” Solomon told Yahoo Finance Live at Goldman’s 10,000 Small Businesses Summit (video above). “But that doesn’t mean that we can’t — through appropriate monetary actions and different policy actions — get back to a better place where things are more in balance. But at the moment, inflation is a big issue.”

Solomon added that inflation is a “hard thing to crack,” but he is confident the Fed’s efforts to raise rates will get the situation under control. The Goldman leader thinks we could see a “flattening out” of inflation later this year and into 2023.

You can read the full article, here.

 

 

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