Message to bears + 2023 Year End targets from major banks

Submitted by Player896 t3_z92qf9 in wallstreetbets

Dear fellow bears, I am in as much pain as anyone else. Thankfully, my put options expire in September and I have the capacity to wait out the irrational holiday rally. I may even add to my position if things go up enough.

In the end, a recession for next year is pretty much 100% and stocks have not priced any of that in. Its a hill I am willing to die on. In the meantime while the bulls enjoy their short lived period of joy and exuberance, here are some 2023 market commentary from some of the top investment banks.

Goldman Sachs

  • 2023 Bear Case: 3150 Trough -> Year End 3750
  • 2023 Base Case: 3 Month 3600 -> 6 Month 3900 -> Year End 4000
  • FY23 to be highlighted by a lack of earnings growth as revenues grow y/y but margins are pressured
  • Sharp inflection in the cost of capital to weigh on valuations
  • Tightening cycle to end in May at 5.0-5.25%
  • Base case sees a soft landing, but a hard landing remains a distinct risk
  • Favors defensives with low rate risk (healthcare, consumer staples, energy)

Morgan Stanley

  • 2023 Bear Case: Year End 3500
  • 2023 Base Case: 3 Month 3000-3300 -> Year End 3900
  • Flexibility is now critical as street earnings expectations remain far too high vs reality; margin expectations also far too high
  • Fed pause to coincide with the arrival of a recession (payrolls are negative); to peak at 4.625% in Q1 2023
  • Does see a return to growth in 2024 off positive operating leverage returns
  • Favors Defensives such as staples, healthcare, utilities, and some energy

JPMorgan

  • 1H 2023 Base Case: To bottom around 3200-3500
  • Expected current rally strength to stall in the 4100-4200 area; notes economy not at imminent risk of recession
  • Largely dependent on inflation prints and market rate expectations; hot inflation would raise expectations of higher/longer rate hikes and vice versa for cold inflation prints
  • Base case sees a 5% Fed funds rate, a US recession in late 2023, and some easing soon after
  • Bear case sees a global recession in 2024 as inflation does not normalize in 2023 and rates are forced to rise materially further
  • Notes there is a lot of room for forecast errors & believes core CPI is the key in forecasting terminal rate eases
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Comments

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enterdoki t1_iyesbeo wrote

🤣🤣🤣🤣 no one knows shit about fuck

214

PotatoWriter t1_iyfbnwo wrote

Might as well post commentary from my local 7/11 and it be just as valid

15

FagotDelightBan6901 t1_iyeqrdg wrote

This is some high grade copium. Nobody knows wtf is going to happen but we do know bears took a generational kick to the nuts today.

169

loophole64 t1_iyfc9qm wrote

Literally everyone knows there is a recession coming.

12

cman1098 t1_iyf3gs3 wrote

People want to talk about how a recession is coming when growth names have been in a 2 year stock bear market and a 1 year bear market for the major indices. We just lived through the recession already and the market is forward looking. Stonks go up from here and we have bottomed. The recession isn't coming, it has already passed us by and it was a weird one.

edit* - stocks also bottom about 3 months before a recession is over. All the lays offs have finally happened and come the end of January no one will be talking about a recession anymore.

1

PSUBagMan2 t1_iyfamb3 wrote

People here seem to straight up be praying for a depression. It's so weird.

7

loophole64 t1_iyfci8x wrote

The word is recession. And yes, people want it, including the fed. That's how you fix the inflation problem. A recession is better than runaway inflation. Recessions are necessary. It's not immoral to want the economy to correct and reign in out of control inflation.

16

cman1098 t1_iyfbhpt wrote

That's how you know bottom is in. Reminds me of the seperate variation post and how frothy everyone was in March/April 2020. Everyone was sure SPY was going to break below 200 and all the bears lost their ass.

4

loophole64 t1_iyfcm2p wrote

The stock market is not the economy.

3

cman1098 t1_iyfdg76 wrote

You are right, so there is no reason to be talking about a recession coming on the stock forum because they aren't the same thing. Recession does not equal stocks going down in your case then.

This bear market has already been longer than average and returns after midterms have historically gone up every single time since tracking has begun.

The 2 quarters of negative gdp already happened, that was the recession. Just had growth again in Q3.

1

Mage_Ozz t1_iyepn5m wrote

I think your post is priced in already

103

mpoozd t1_iyf7fhw wrote

Your comment was priced in before I see comments

7

CaptainStonks t1_iyew29i wrote

If theres a recession next year, the Fed will lower interest rates ... Bullish.

If theres no recession next year companies will make profits ... Bullish.

75

neutralpoliticsbot t1_iyepwv9 wrote

Looks like if I hold my stocks at these levels at worst I break even.

I am 100% taking this bet. If Russia Ukraine war ends sometime soon its rockets

49

DazzlingTumbleweed t1_iyetlvd wrote

You don't know russia very well if you think the war's going to end soon

30

bagacrap t1_iyfasoh wrote

wait, Russia's at war? Why hasn't anyone else besides you heard about this?

1

casey-primozic t1_iyf2y6u wrote

And if it gets worse, we get WW3. Wars are good for stocks. Win/win!

2

sumredditaccount t1_iyesvjy wrote

Can you explain the catalyst for this? Do you not think a bunch of growth expectations were pulled forward over the last couple years?

1

WTD_Ducks21 t1_iyepul8 wrote

The higher this rally goes, the more tempted I am to buy deep OTM puts for late 2023.

35

ImJoeontheradio t1_iyeujs2 wrote

Same. If BA goes over 200 by the end of the year I'm looking at Sept/Oct OTM puts on a day when the IV settles.

5

ExtensionEbb7 t1_iyethw6 wrote

Imagine putting your faith in the same banks that needed tens of billions from taxpayers just to stay solvent after the 2008 crash. The very same banks that consistently rack up millions in fines for ripping off their own customers. Literally, the very same banks that just admitted using WhatsApp to purposefully circumvent federal securities laws. Just imagine, LMAO.

33

TimujinTheTrader t1_iyf26gl wrote

Base case for all banks is a 20% drop in S and P 500 after a year with a 16% drop. These guys are regarded and I want their jobs. I can throw darts at a board with stocks on it as good as anyone else can.

6

rolotomo1 t1_iyesjcf wrote

A lot of the people on this sub are young post pandemic traders. Market operates on a business cycle based on credit leverage. We are going through a deleverage soon, instigated by rising rates and inflation, hence all the layoffs you see. The effects will hit Main Street in a couple months and equities will sell off between 20-30%, from current levels. Then they will bounce back higher then before. If you’re an investor, it’s obvious. But for traders, they see things day to day. Market should finish the year strong, but problems are obvious around the corner.

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taetae33 t1_iyeyan7 wrote

Every bear market we get clowns like you who come in AFTER majority of the downward movement already happened and then are just baffled by why their poor. The market hasn't bottomed yet, but neither has your portfolio.

25

HowIsEmuWarriorTaken t1_iyery48 wrote

Bro, September puts expired like 3 months ago

22

rp2012-blackthisout t1_iyetw4j wrote

There is going to be another Sept eventually.

15

stejerd t1_iyeum59 wrote

That's confusing. Why not call it September 2 or New September?

17

thenumber88 t1_iyevh18 wrote

Why don’t we go by how many Septembers happened so far? Like September 2023 for the next one?

7

SeptemBEAR2022 t1_iyeylwl wrote

So what happened before September 1? Are there negative septembers?

6

EarthInteresting9781 t1_iyeuc9w wrote

Let me get this straight Powell said their is no pivot and will continue to raise interest rates, but at a slower and smaller pace yet everyone on Wall Street is celebrating? Why? That’s mean much of 2023 will be dominated by interest rate increases still…

12

laserinlove t1_iyf5a7f wrote

>Its a hill I am willing to die on.

How do I buy calls for the plots being sold on this hill?

9

hoopaholik91 t1_iyeorj4 wrote

> In the end, a recession for next year is pretty much 100% and stocks have not priced any of that in.

Umm...have you looked at stock prices recently?

8

pausemenu t1_iyep83d wrote

What about them? S&P 406 still seems pretty healthy…

12

lorenavedon t1_iyevg5z wrote

yeah. a whopping %15-%20 pullback from the largest bubble in human history. We haven't even begun to deleverage that froth. S&P was in a massive bubble right before the pandemic at 3200, dropped to 2500, now we're over 4000 and people think that's good enough for a pullback? LMFAOROFLCOPTERDOWN img

5

Player896 OP t1_iyepyeu wrote

I understand markets remain down around 20% from 2021's highs. That said, we are coming down from some pretty lofty valuations.

Even when accounting for the declines over the last 6 months, stocks have absolutely not accounted for any of the shitstorm we will see in 2023.

Forward expectations across earnings and multiples remain too high. We have not reconciled how bad things are looking across PMIs and ISMs. Employment remains at levels that are inflationary vs disinflationary.

4

Hacking_the_Gibson t1_iyerb3u wrote

I think you're out of sorts.

Energy is keeping SPX elevated. GOOG, AMZN, MSFT, AAPL, et al have all seen massive drops.

There will be a rotation back to tech.

13

SnortinDietOnlyNow t1_iyetc8c wrote

Tech is no longer over valued. In fact with the amount of revenue like NFLX and META or AAPL I would say they are undervalued. Now energy is overvalued.

6

youvebeenjammed t1_iyf1j52 wrote

Ya Buffet is gonna dump Chevron and Occidental to buy more Apple this week /s

1

majinhell t1_iyes6cm wrote

You are fighting history, the SPY will still close down for the year even with a rally, ppl have to quit waiting for the big one, there has already been several great entry points. Just play the swings while you can before we get a decade of 3% -6% gains

8

Attorney-Outside t1_iyet4rr wrote

this moron's idea is stocks pricing in a recession is big tech stocks going down 99%?

fucking moron

7

VisualMod t1_iyen4d6 wrote

>Thank you for your market analysis. I agree that a recession is likely in the next year, and that stocks have not yet priced this in. I also believe that defensive stocks are a good investment at this time.

5

OneTIME_story t1_iyf7nca wrote

And that's why you'll always be Player896 and never Player1

5

rwang411 t1_iyeroc5 wrote

I’m with you playa

4

falling_knives t1_iyf8gu9 wrote

Anyone have predictions from these same banks leading up to the 2008 crash?

4

xmustangxx t1_iyeqkpu wrote

Is this the 🐻 support group we’re we all acknowledge we were stupid and greedy? Or the one where we tell each other to keep doing dumb things?

3

nyse125 t1_iyerqzd wrote

People should read the citibank baseline scenario for each soft/hard landing situation, it puts things into perspective.

3

moMoPIZA t1_iyezf7n wrote

J Pow can smell your puts from miles away!

3

spellbadgrammargood t1_iyf9vq4 wrote

i have access to Morningstar and they don't know shit either

3

Regarded-FD t1_iyerot0 wrote

OP quoting JP morgan… FFS

2

PhoqueBoi t1_iyevfr1 wrote

Bears can suck my dick. SPY is going back to $420

2

FartBrulee t1_iyf5oyb wrote

Market down 50% yet still not priced in.

🤡

2

VisualMod t1_iyen3jb wrote

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^^Discord ^^BanBets ^^VoteBot ^^FAQ ^^Leaderboard ^^- ^^Keep_VM_Alive >TL;DR: The market is in for a rough ride in 2023, with a recession and rising interest rates on the horizon. Goldman Sachs, Morgan Stanley, and JPMorgan all favor defensive stocks in this environment.

1

Soft-Breadfruit8690 t1_iyeqgjj wrote

A bear somewhere cries with impotent rage every time you just DCA passive funds and dgaf

They also believe that passive funds move the market when they represent an extremely tiny amount of trade volume. Prices are set by active market participants.

1

Sufficient_Glass_490 t1_iyex7cw wrote

Powell fucked the bears. While I don’t expect spectacular returns for a while, bottom is behind us as is peak inflation

0