After the worst start for the S&P in 50 years, market prognosticators on CNBC are trying to call a bottom.

Here are just a few of the headlines from the past week:

📰 “Maybe the stock market has put in a ‘DaVinci Code' bottom, says Ed Yardeni
📰 “The market has put in a bottom”
📰 “Charts suggest the market could find a bottom after a little more weakness, Jim Cramer.”

The Runnymede team made our bearish call on April 6th, and we do not see a bottom as of yet. Sure there can be bear market rallies; but with the Fed now expected to hike 100bps at the next meeting, we expect volatility ahead.

Earnings season has just begun and while it is still early, the results haven't been pretty.

With 39 S&P constituents reported so far, earnings are down over 14%. The pain is especially being felt in financials with earnings down over 30%. While earnings will probably end up better than early reports, the trend is clearly for slowing growth. Company profitability is getting squeezed by rising inflation, and multinational corporations will feel additional pressure from the strong dollar which is now at parity with the Euro.

During the JP Morgan earnings call, CEO Jamie Dimon stuck by his warning earlier this summer that a “hurricane” is headed for the economy. “I haven't changed my mind at all. The negatives I pointed out, the risks in the future, are still the same risks. They're nearer than they were before.”
Jobless claims on the rise

Another sign that we aren't near the bottom yet is jobless claims. Typically, recessions don't end until job losses move higher. This has barely started with initial claims at just 244,000 in the latest report.

If you've been tracking recent headlines, big corporations like Tesla, Coinbase, Netflix, Peloton, Robinhood, and JP Morgan have announced job cuts or hiring freezes. In the chart above, compare the Wilshire 5000 index (red) vs initial claims (blue.) Past recessions are the shaded grey vertical bars. While the market does tend to bottom before the peak in claims, it would be highly unusual for a market to bottom before job losses even begin.

Nobody said calling a market bottom is easy. Remember that bottoming is a process, not a point. We will keep you posted as we analyze Federal Reserve statements, economic reports, corporate earnings calls, and stock prices.

Feature image from Unsplash