wildpixel/iStock via Getty Images

wildpixel/iStock via Getty Images

On Tuesday, I joined Ashley Webster on Fox Business - the Claman Countdown - to discuss the Stock Market, Fed and Opportunities. Thanks to Liz and Ellie Terrett for having me on.

While US just marked a bear market close yesterday, China now appears to be coming out of a pronounced Bear Market that began 16 months ago.

The yield curve (2/10 spread) already inverted and we had negative GDP in Q1. The definition of a recession is 2 consecutive quarters of negative GDP growth. Here's the latest estimate from the Atlanta Fed for Q2 GDP:

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Here's a question: What if we already HAD the recession and Q2 comes in negative? How much do you think is already priced in considering the US indices already marked a bear market on Monday (down 20% on closing basis)? We think most (if not all) of a mild recession has already been priced in. The market always bottoms before the data begins to improve. By the time they announce a recession, the market bottom will already be in the rear-view mirror. That announcement could come as early as next month if we see negative Q2 GDP - or as late as mid-2023 if we don't - but our base case is it will have been/will be shallow.

We covered - in the last week - the idea of "Peak Inflation." While Friday's CPI report was a train wreck, Tuesday's PPI report (wholesale prices) told a better story (and is a leading indicator):

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This is consistent with a view we expressed is that we could be peaking (as it relates to inflation) based on these leading indicators:

We discussed the possibility of a better than expected PPI print in 2 interviews on Monday - before the data was released (much better than my CPI expectation!). Thanks to Ryan Gallagher and Phillip Yin for having me on CGTN America on Monday night to discuss:

On Mitch Hoch's Benzinga show, we just go with the flow! We talked hockey, energy, Russia, inflation, CPI, PPI, opportunities, sentiment, multiples, positioning and more. Not to be missed! Thanks to Mitch and Zoltan Suranyi for having me on.

On Tuesday, Bank of America put out its monthly "Fund Manager Survey" which surveys ~300 managers with ~$750B AUM. Here is my full summary:

The three key points I want to focus on are:

1) Managers expect inflation to fall. Historically they have been correct:

2) Optimism on Global Growth has only been this low at/near market bottoms:

3) Everyone thinks Oil will continue to outperform. While managers "say" inflation will come down, they continue to chase energy. This sets it up to be the "pain trade" of 2H:

While pessimism continues to climb to a new all-time high - so do earnings! One of the two will have to come down soon. My bet is that pessimism will come down more than earnings:

In this week's AAII Sentiment Survey result, Bullish Percent ticked down to 19.4% this week from 21% last week. Bearish Percent jumped to 58.3% from 46.9%. Retail investors are extremely fearful once again.

The CNN "Fear and Greed" dropped from 36 last week to 18 this week. This shows extreme fear.

And finally, the NAAIM (National Association of Active Investment Managers Index) rose to 50% this week from 34.33% equity exposure last week.

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Disclosure: I/we have a beneficial long position in the shares of BABA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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