Dan Nathan says the Stock Market has Become a Pawn

Bullish Studio

Dan discusses the market continuing to remain in bear market territory.   Dan comments on Mike Wilson stating that something is about to break here.   Dan also talks S&P estimates and says it is one step forward and two steps back in bear markets like this.

Transcript

00:00 What is going to be that catalyst for rates to settle down?

00:02 We've got just craziness happening around the world.

00:05 I mean, if you took a look at the UK 30-year guilt,

00:08 we hit levels that we have not seen since 1998.

00:12 What is going on in fixed income broadly is just unprecedented.

00:17 Yeah, and again, we keep hearing this expression

00:20 by people who kind of get some of this macro stuff

00:22 better than we do, that something's about to break.

00:24 And if you look at what's going on in basically the British town,

00:27 we've been talking about what's going on with the euro.

00:30 The 20-year took 20 years, the BOJ intervention there with the yen.

00:34 I mean, there's things going on here where stock markets are just

00:37 kind of a pawn here.

00:38 And we're sitting here trying to find out individual names.

00:41 And really, it comes down to--

00:43 Mike Wilson, who comes on the show a lot from Morgan Stanley,

00:45 he just took down his S&P estimates.

00:47 And per facset, they're coming down year over year.

00:50 I think 9% growth was expected.

00:52 Now consensus is about 7.5%.

00:54 You tell me what the right multiple is

00:56 in a recessionary environment that we have not even

00:58 hit the recession yet, and we're going

01:00 to be in a profits recession.

01:01 I don't know.

01:02 You want to put 14?

01:03 You want to put 15 times?

01:04 He's got $2 in earnings for next year.

01:08 You put 14 on that, and you get below 3,200.

01:11 It's not far from Guy's level here.

01:13 So again, nothing's going to go in a straight line.

01:15 And the C word is a dangerous word, especially this time of year.

01:19 I just don't think we go down there like that.

01:21 Well, the crash.

01:22 I mean, I just--

01:22 I didn't know where it was going, but I got it.

01:26 You made me say it.

01:27 I didn't want to say it.

01:28 I don't want the headline to be that.

01:30 But my point is it is one step forward, two steps back

01:32 in bear markets like this.

01:34 And that's clearly what we're in.

01:35 Well, the C word could also be double C or C squared

01:38 or constant currency.

01:39 And all we hear about is the dollar.

01:40 But what we haven't heard about even in mega cap tech

01:43 is in constant currency terms, where they're going to cut.

01:46 In other words, we know the dollar has been a beast

01:49 and is certainly a major headwind.

01:50 And I think that at some point it becomes a tailwind.

01:54 The dollar is so overbought.

01:55 It doesn't mean it can't go further, especially based

01:57 upon what's going on with the differentials in policy.

02:00 But I haven't heard talk of budget cuts

02:03 as it relates to enterprise or CapEx or software.

02:06 That hasn't flowed through from any of the mega cap tech

02:08 companies.

02:09 And again, forget the dollar.

02:10 How about constant currency?

02:11 How about some of these companies

02:13 that really have been the lifeblood of this move?

02:16 Again, Apple's outperformed the S&P by 175%

02:19 over the last five years.

02:21 It's clearly been a major boost to the entire marketplace.

02:25 And I just don't think those comps-- things we can hold up.

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Transcript

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