Savvy Trades and Investments

[wadegarret]

Re, like to get your opinion

Lets assume that inflation overall comes down to 3.5%-4%, and that the Fed raises rates to 4.75% and stops. Interest that corporations pay is still over twice vs a year ago, and every time inflation wanes, corporate pricing power also wanes(lower revenues). If we assume S&P eps for 2023 at $220, PEs are still selling at a 18+ PEs going forward.

Re, my question is, how in the world, in an environment of flat yoy S&P earnings growth at best, can PEs sustain at 18+ going forward ? I mean average PEs in the S&P in normal times is around 16, and more like 13-14 in slowdowns. Why would anyone want to be long in a market where S&P PEs so much higher than normal, while earnings are expected to be flat at best going forward ? I mean flat is the best scenario mind you, while there are risks of S&P eps being more like $200 or less as well, as Mike Wilson thinks.

I am totally stumped by this market action. Maybe everyone thinks that China opening will be big for US companies, I don't know, but even if China helps, it will only be temporary. I remain short again as of todays numbers