Bear markets occur in three phases; the veteran analyst says we have just begun the second.


Stocks will start the Black Friday session near a 10-week high, partly recovering on hopes that the Federal Reserve will slow the pace of interest rate hikes as it waits to see how much earlier tightening has affected the economy.

So investors are waiting to see when the Fed will turn around and when borrowing costs might start to fall again. For now, they show few concerns about how much any economic slowdown could hurt corporate earnings.

Peter Boockvar, chief investment officer of Bleakley Financial Group, believes that everything is very rosy. In an interview with Magnifi+, an AI investment and trading platform, the veteran analyst warns that stocks will be lower next year and that we have yet to see the bottom of the mid-stage bear market.

“Bear markets usually come in three stages. First, we take a lot of the frothy excess and euphoria out of the market in terms of the sexier names we see in 2021 and lower the PE ratio. We did that, 22 times earnings, call it 16 to 17,” Boockvar says.

He adds that in the second phase, investors begin to calculate the economic and company earnings implications of continued interest rate hikes…” and then the third phase is when everyone throws in the towel. Nobody wants to own the stock again, and that’s your bottom line, and then you’re going to have to surrender the stock.”

“I feel like we’re really starting to get into that second phase,” he said.

There will still be opportunities. According to Boockvar, it all depends on the time scale.

“If you have a big purchase to make in the next year or two, whether it’s a kid going to college or another expense like a wedding, bar mitzvah, or a house you’ve been saving for, it should. not being on the stock market. It should be in the bank, it should be in short-term bonds. It should be in cash equivalents because the next few years will be tough for those with shorter time horizons,” he said.

So, what assets is he interested in? Bonds are attractive, but it’s important to stick to quality.

“You have investment-grade bonds that are yielding 6%, and you can do that without taking too much long-term risk by buying shorter-term….And you can buy short-term, two-year Treasuries and get four and four percent. get half interest and attractive Munis too. So fixed income land, for a shorter period of time, I believe is more attractive. Longer trading periods, I’m still more skeptical,” says Boockvar.

What about stocks? “Value stocks are more attractive than growth and technology stocks. I think commodity stocks are more attractive than they have been in the last five years. Of course, energy, precious metals, even industrial metals like copper reserves.

If the dollar has peaked and retreats as the Fed nears the end of its hike cycle, Boockvar likes the outlook for foreign markets, particularly Asia, and gold and silver once the central bank starts cutting rates.

Finally, one thing she’s definitely not keen on is her ex-boyfriends’ technologies. “Just by Google buying GOOGL,
-0.66%
and Amazon AMZN,
-0.13%
and Apple AAPL,
-1.90%,
Although they are all large companies, that ship has sailed and the baton of market leadership will pass to other parts of the market,” says the analyst.

Markets

Stocks were in line to start the week’s final trade on the front foot with S&P 500 futures ES00.
+0.08%
Up 0.2% to 4,039 and 10-year Treasury TMUBMUSD10Y,
3.728%
Little changed at 3.709%. US crude oil futures fell 0.7% to $79.50 a barrel.

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Buzz

It’s a half-day of trading for Wall Street as many traders extend the Thanksgiving holiday. Expect very thin volumes.

Still, analysts and investors are looking for guidance on how Black Friday sales are going. How is the US consumer coping with high inflation and skyrocketing borrowing costs? Shares in Amazon AMZN,
-0.13%
and Walmart WMT,
-0.28%
was relatively stable.

Tesla TSLA shares,
+0.15%
Premarket activity is up about 2%, despite news that the automaker is recalling nearly 80,000 vehicles in China.

Activision Blizzard shares ATVI,
-4.26%
It fell more than 3% on Wednesday after news that the Federal Trade Commission may block Microsoft from buying the video game maker.

The Fed’s Bullard is set to talk about inflation, interest rates at a MarketWatch Q&A on Monday. Register here to watch the program and ask questions.

China’s central bank has eased monetary policy as the country struggles more with the COVID-19 outbreak.

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Graph

Benedek Vörös, Director of Investment Strategy at S&P Dow Jones Indices, presents an interesting observation on stock volatility.

“It’s been a turbulent year, but a degree of relative calm has returned to US equity markets over the past few weeks, and options market participants seem more comfortable than their cash counterparts,” Vörös wrote in his latest newsletter. “The VIX is down 6 percentage points from yesterday’s close, averaging 3 points above the S&P 500’s 21-day volatility over the past year. Historically, this has had some predictive power for the future of lower volatility.

Source: S&P Dow Jones Indices

Top tickers

Here are the most active stock tickers on MarketWatch as of 6 AM Eastern.

Ticker

Security name

TSLA,
+0.15%

Tesla

GME,
-0.37%

GameStop

AMC,
-0.98%

AMC Entertainment

NIO,
-4.17%

NIO

COSM,
+22.50%

Cosmos Holdings

AAPL,
-1.90%

apple

APE,
-1.24%

AMC Entertainment is preferred

BBBY,
-1.20%

Bed Bath & Beyond

AMZN,
-0.13%

Amazon.com

MULN,
-6.25%

Mullen Car

Reads casually

Japanese fans are showing the world how it’s done.

Coin research shows ‘false emperor’ to be real.

One was going to buy gold.

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