Recessions are typically defined by macroeconomic metrics like GDP & unemployment, data that relates to consumers. However, little attention has been dedicated to analyzing whether we are in a corporate profit recession. Fortunately, Corporate America is in pretty good shape – at least through 3Q22.
While stock investments can be very lucrative over the very long-term, everything depends on the timing of your exit. Also, success depends on your ability to stand steady when the sky is falling all around you. Of course, past averages do not guarantee future performance…
While Fed rate hikes have been successful in deflating the stock bubble, it has been a burden sustained primarily by consumer stocks when the government should be looking at excessive energy profits and their outsized impact on inflation.
2Q22 S&P 500 revenues continued their rebound from covid lows, benefitting from price hikes designed to help offset inflationary pressures.
Based on historical P/Es of the S&P 500, we can predict how much lower it is capable of dropping.
While Target’s topline was plenty strong, the stock got crushed by $1B in unexpected freight costs, and slow moving high-end inventory.