amid the banking fears, firms are still set to face earnings pressure, he warned, which the market hasn't yet fully priced in.
"The malinvestment was just so egregious and the overearning was even worse," he said of tech stocks' strong performance."We think that risk for the equity market is elevated now more than it's been in the last 6-12 months."worst earnings recession since 2008 to hit the market. That's because the Fed is set to keep interest rates high throughout 2023 — which weighs on stocks through a higher cost of borrowing — and firms likely haven't cut costs enough yet to beat the headwinds, in his view.
That's been worsened by the recent volatility stemming from the collapse of Silicon Valley Bank, which has sparked fears of more bank contagion and"Given the events of the past few weeks, we think guidance is looking more and more unrealistic, and equity markets are at greater risk of pricing in much lower estimates ahead of any hard data changes," he said separately in a note on Monday.
The poor performance in low-quality and small-cap stocks indicates the final stretch of the bear market is around the corner, he added.
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