Earnings season could flip an unsightly nook.
Lengthy-term bull Artwork Hogan warns a storm of disappointing company steerage and missed income targets is forward.
“Buckle your seatbelts,” the Nationwide Securities’ chief market strategist informed CNBC’s “Buying and selling Nation” on Friday. “This would be the first time within the cycle you are really going to listen to extra corporations information down than information up.”
Hogan cites headwinds tied to provide chain backlogs, inflation and employee shortages.
“There’s going to be an actual earnings season of haves and have nots,” Hogan mentioned. “The haves actually have that pricing capacity.”
He cites Snap’s third quarter outcomes for instance of upcoming bother. The social media big reported final Thursday a income miss and it lowered steerage — citing bother in its promoting enterprise and world provide chain interruptions. Snap inventory is off 27% because the announcement.
“Combination demand is outstripping combination provide,” mentioned Hogan. “If you do not have issues to promote, you are in all probability not growing your advert funds.”
He urges long-term traders to withstand the urge to react to volatility and believes they need to take a barbell strategy to investing, with progress on one finish and cyclicals on the opposite.
“Any given earnings reporting season is just not the time to make a broad sweeping change to your long-term investments plan,” he mentioned. “However be sure you know what you’ve gotten in your progress facet, and be sure you’re selecting corporations that truly are sector leaders and are measured in a P/E [price-to-earnings ratio] versus worth to revenues.”
He believes the ache will not trickle into year-end. His S&P 500 year-end goal is 4,700, which means a 3% acquire from Friday’s shut.
“We have an extended runway in entrance of us, and I feel numerous demand that wasn’t satiated this yr will get dragged into 2022,” Hogan mentioned.
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