Bear markets occur in three stages;  and we've only just started the second, says a seasoned analyst.

Bear markets occur in three stages; and we’ve only just started the second, says a seasoned analyst.

Stocks will start the Black Friday half-session near 10-week highs, having rebounded in part on hopes that the Federal Reserve will slow the pace of interest rate hikes while they wait to see how much tightening previous had an impact on the economy.

Investors are therefore anticipating when the Fed will eventually pivot and borrowing costs can begin to fall again. For now, they are showing little concern about the damage an economic slowdown could cause to corporate earnings.

Everything is too rosy, says Peter Boockvar, chief investment officer of Bleakley Financial Group. In an interview with Magnifi+, an AI investing and trading platform, the veteran analyst warns that stocks will go down next year, and we haven’t seen the bottom of a bear market yet in its wake. intermediate phase.

“Bear markets typically play out in three stages. The first is that we are removing a lot of the frothy excess and euphoria from the market in terms of sexy names that we have seen in 2021 and we are reducing a PE ratio. We did that, we went from 22 times earnings, call it 16 to 17,” says Boockvar.

In the second phase, he adds, investors begin to calculate the economic and corporate earnings consequences of continued interest rate hikes…”then the third phase is everyone throws in the towel. No one doesn’t want to own any more stocks, and that’s your bottom line and that’s when you need to buy stocks in spades.”

“I feel like we’re just beginning this second phase,” he said.

Still, there will be opportunities. It all depends on your timescale, according to Boockvar.

“If you have a big purchase that you need to make in a year or two, whether it’s a kid going to college or a wedding or a bar mitzvah or a other expense like a house that you have put money aside for, it should not be in the stock market It should be in the bank, it should be in short-term treasury bills It should be in cash equivalents , because the next two years are going to be difficult 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 higher quality bonds yielding 6% and you can do that without taking on a lot of duration risk by buying short durations…. And you can buy a two-year short-term treasury bond and get a yield of four and a half percent and also get attractive Munis. So fixed income lands, with shorter durations, I believe, are more attractive. Longer-term trade durations, I’m even more suspicious,” Boockvar says.

And in shares? “Value stocks are much more attractive than growth, technology stocks. I think commodities stocks are much more attractive than they have been over the past five years. Certainly energy, precious metals, even industrial metals like copper stocks.

If the dollar has peaked and is falling as the Fed nears the end of its bullish cycle, then Boockvar likes the look of overseas markets, especially Asia, and gold and silver once the central bank begins to cut rates.

Finally, the only thing he definitely doesn’t like are the old darlings of the technicians. “I just bought Google GOOGL,
-0.66%
and Amazon AMZN,
-0.11%
and AppleAAPL,
-1.88%,
while they are all big companies, that ship has sailed and the baton in terms of market leadership is going to be passed to other parts of the market,” the analyst said.

Markets

Stocks were in line to begin the last trading of the week on the front stage, with S&P 500 ES00 futures,
+0.12%
up 0.2% to 4039 and 10-year Treasury yields TMUBMUSD10Y,
3.728%
were little changed at 3.709%. U.S. crude futures fell 0.7% to $79.50 a barrel.

For more market updates and actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

It’s half a day of trading for Wall Street, as many traders also extend their Thanksgiving break. Expect very thin volumes.

Still, analysts and investors are looking for advice on how Black Friday sales will unfold. How is the US consumer weathering high inflation and soaring borrowing costs? Shares in Amazon AMZN,
-0.11%
and Walmart WMT,
-0.22%
were relatively stable.

Shares in Tesla TSLA,
+0.22%
are up about 2% in premarket action despite news that the automaker is recalling about 80,000 cars in China.

Activision Blizzard shares ATVI,
-4.11%
are down more than 3% after a report late Wednesday that the Federal Trade Commission may block Microsoft’s purchase of the video game maker.

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

China’s central bank has eased monetary policy as the country grapples with fresh outbreaks of COVID-19.

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Activists are adding to the climate headache for art insurers.

Table

Here’s an interesting observation on stock volatility from Benedek Vörös, director of index investing strategy at S&P Dow Jones Indices.

“It’s been a turbulent year, but some relative calm has returned to U.S. stock markets in recent weeks, and options market participants seem even more relaxed than their cash counterparts,” Vörös writes in his latest newsletter. . The VIX, which has averaged 3 points above the 21-day realized volatility of the S&P 500 over the past year, slipped 6 percentage points below at yesterday’s close. . Historically, this has had some predictive power for lower volatility to come. »

Source: S&P Dow Jones Indices

Best Tickers

Here are the most active stock tickers on MarketWatch as of 6 a.m. Eastern Time.

Teleprinter

Security Name

TSLA,
+0.22%

You’re here

EMG,
-0.26%

GameStop

CMA,
-0.85%

AMC Entertainment

NIO,
-4.17%

NIO

COSME,
+20.31%

Cosmos Holdings

AAPL,
-1.88%

Apple

MONKEY,
-1.50%

Favorite AMC Entertainment

BBBY,
-1.35%

Bed bath and beyond

AMZN,
-0.11%

Amazon.co.uk

Mulana,
-6.10%

Mullen Automotive

Random plays

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

A study of coins suggests that the “false emperor” was real.

Someone has embarked on a gold-buying adventure.

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