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This commentary was recently published by money managers, research firms and market newsletter writers and has been edited by Barron’s.

Crypto Endgame is nowhere near

Paulsen’s perspective

The Leuthold Group
June 24: Cryptocurrencies have long been considered sudden speculation, destined to end badly.

Bitcoin

it has fallen from almost $70,000 to about $20,000 since last November and is now only $10,000 higher than it was in 2017. An asset with a 70% price drop in just seven months is often a sign of bankruptcy! Consequently, given the extreme collapse in Bitcoin prices, judgments that the Crypto Craze is coming to an end have intensified again.

That may turn out to be correct. But, overlaying the Bitcoin chart and the

S&P 500
[suggests] the last six months drop in Bitcoin is not that bad. Bitcoin has decreased less than between December 2017 and December 2018. Furthermore, in 2011 and 2014, Bitcoin saw even larger percentage declines. That’s what Bitcoin does: it goes up much more aggressively and crashes much harder than most other investments. Therefore, the massive price declines, while eye-catching, do not suggest that the asset class is insolvent.

Although the price of Bitcoin has fallen almost three and a half times as much as the S&P 500 since its recent high, both are about the same price as they were at the end of 2020. It is a bear market, and although both are down substantially, it is likely that Neither of them close soon.

James W Paulsen

Sudden drop in raw materials

talking points

BMO Capital Markets
June 24: Hardly anyone now seems to believe that the economy can achieve a soft landing in the face of the ongoing battle against inflation, not Fed Chairman Powell, not even the local president.

Uber

driver, cardi bNeither do most Canadians. Each has opined in their own unique communication style that expansion is at serious risk in the coming months. In his testimony to Congress this week, Powell suggested that the path to a soft landing is becoming “increasingly more challenging” and that reducing inflation without increasing unemployment will be “significantly more challenging.” Financial markets are pricing in those growing risks: cyclical commodity prices and yields pulled back significantly this week…

A key indicator reinforcing the view that growth may soon collapse is the surprising drop in commodity prices. Oil prices dominate the airwaves on this front and pulled back slightly after a big stumble last week. Even with a consolidation on Friday, they are still near the lowest levels since early May at around $107 a barrel. Natural gas prices in North America have fallen further, albeit for reasons that go beyond growth prospects. Perhaps more telling is the sharp pullback in industrial metals, particularly Dr. Copper. The red metal has fallen nearly 20% in the past three weeks and is now at its lowest point since early 2021, after hitting a record high in the immediate aftermath of the Ukraine invasion. Many broad measures of ex-energy commodities, including agriculture, are now lower than pre-invasion levels amid global growth concerns.

douglas goalkeeper

Markets and Midterms

strategy focus

RBC Capital Markets
June 21: We were surprised by how often midterms came up in our recent conversations with US equity investors, with several reminding us how the stock market tends to be weak ahead of midterms and it tends to pick up about a month before elections are held. In turn, we have reminded investors that stocks tend to rise in mid-election years, but with returns well below trend, with average/median annual gains of ~6% dating back to the 1930s. We’ve also pointed out that it’s not just the stock market that may get a boost from the midterms later this year. If Republicans do well, as investors widely anticipate based on poor polling data for President Biden and the Democrats, it could also help consumer confidence. One of the things that has struck us in the University of Michigan consumer confidence survey is that Republicans feel much worse than Democrats. While sentiment from both Republicans and Democrats has ebbed in recent months, it has hit new lows for Republicans. Meanwhile, sentiment remains above previous lows for Democrats.

Lori Calvasina

the generals fall

Technical Strategy

BTIG
June 20th: The generals have finally been shot. Through June 7, the three best performing sectors were Energy (+65%), Utilities (+2%) and Materials (-5%). As of June 8, those are the three worst-performing sectors, down 20%, 12%, and 14%, respectively. This has brought the overall amplitude to levels close to collapse. Only 10% of

russell 3000

components are above their 200-day moving average, with 43% of the S&P 500 hitting a 52-week low last Thursday. Yields and commodities appear to have reached tactical highs, and several of the low-momentum groups (

Ark Innovation ETF
,

SPDR S&P Biotechnology
,

etc.) did not make new lows last week.

While we continue to think the S&P 500 is likely to go below 3500 before a final capitulation event, there has been enough short-term damage to suggest a move higher towards the end of the quarter, coinciding with continued easing of momentum. of the factors. . This means that long duration/growth should lead, while defenses and energy should lag behind.

jonathan krinski

Unstable earnings outlook

Palumbo Pulse

Palumbo Wealth Management
June 18: A recession could hit corporate profits to the tune of 10% to 15%. Given that 2022 earnings estimates for the S&P 500 still stand at around $225, we see a downside of around $200 per share. Apply a price/earnings multiple of 16 to those earnings and that brings us to a target of 3,200 for the S&P 500, with the caveat that the market typically overshoots both higher and lower. Buckle up, it could be a long and hard summer. But once growth estimates are revised, buying opportunities should appear.

Philip G. Palumbo, Doug Augenthaler

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