Wilson said the gap between reported earnings and cash flow is the widest in 25 years, driven by excess inventory and capitalized costs that have yet to be reflected.
Despite dovish comments from Federal Reserve bankers and persistently high inflation and employment data, the S&P 500 is up 5.4% this year, while the world’s largest tech benchmark Nasdaq 100 index 12% Wilson had recently announced that he expects a deterioration in fundamentals.
Such caution is echoed at JPMorgan Chase & Co., where strategies led by Mislav Matejka advise exposed investors to use recent gains as an opportunity to cut.
Matejka is also particularly negative on US stocks, noting that relative valuations and earnings are near all-time highs, while it could “continue to undo some of the strong streak that will remain for the last 10 years,” according to a note sent on Monday.
