The Bear POV: Amid All the Good Feelings, What Could Go Wrong?

The S&P 500 is nearing its peak, but here is the case made by several prominent Wall Street seers for why things can go awry.


The prospects are good for the stock market. The S&P 500 has advanced almost 20% this year and is close to reaching the all-time high attained in January 2022—the index needs to rise 4.2% more. Odds are that interest rates have peaked and may fall, always a plus for equities. What’s more, December is historically the best month for stocks (the S&P is up 0.8% this month thus far). Bank of America, RBC Capital Markets and Deutsche Bank Group are among the investment firms predicting a good 2024.

What could spoil the widespread upbeat outlook? Warning notes have come from several quarters, ranging from perma-bears like Morgan Stanley’s Mike Wilson to more nuanced views, such as from Goldman Sachs.

Dubravko Lakos-Bujas, JPMorgan Chase & Co.’s chief global equity strategist, told Bloomberg that buoyant market pricing is fueled by an “unrealistic” Goldilocks scenario, with economic growth not too hot to stoke inflation and not too cold to stifle a bull market.

To Lakos-Bujas, a slowdown will lower corporate earnings, consumer pricing power will dwindle and profit margins will suffer. Further, he said, elevated stock multiples and investor crowding into popular stocks—e.g. the Magnificent Seven—at the expense of other names are imbalances that will propel a market fall. His firm expects the S&P 500 will slide 6.5% by year-end 2024.

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To Wilson, Morgan Stanley’s chief U.S. equity strategist, the market’s 2023 rally, on the heels of its 2022 tumble, cannot last. Investors, excited by the prospect of lower rates, are too bullish and stocks are overbought, he warned in a research note. Expect “near-term volatility in both rates and equities” this month, he wrote.

Wilson conceded that the market might enjoy an uptick in early 2024 amid lingering optimism, but he contended that too much trust is placed on the Federal Reserve to aid the market in the long term. “At current prices, markets are now expecting a meaningful re-acceleration in growth that we think is unlikely this year, especially for the consumer,” Wilson declared. He added that soft economic data soon to be released “is not priced into many stocks and expectations.”

Barry Banister, a managing director and strategist at Stifel, Nicolaus who correctly forecast the market’s 2023 bounceback, is less sanguine about long-term results, when adjusted for inflation. He predicted in a note that stocks will be roughly flat until the early 2030s against a backdrop of reinflationary economic growth.

He described how he expects interest rates will stay high and thus crimp earnings, the lifeblood of stock appreciation.

While Goldman Sachs forecasted that the market should keep going up, it’s not by much: The S&P 500 should hit 4,700 by the close of 2024, still short of the 4796 peak, yet above the level of Friday’s close, 4604, in the firm’s view.

Why? Absent a recession next year, “markets are approaching the limits of what can plausibly be priced,” Praveen Korapaty, Goldman’s chief global rates strategist, maintained in a note. Investors are too optimistic about the Fed’s cutting rates in 2024, a key catalyst for what they see as a continued bull run, he wrote.

Certainly, it feels odd to be a pessimist in a large crowd of optimists.

“Almost everybody is bullish. So I don’t know,” JPM’s Lakos-Bujas said. “Maybe we’re the lone crazy people.”

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Chad Tredway Rejoins JP Morgan Asset Management as Head of Real Estate Americas

Tredway will succeed Mike Kelly in the role.

Chad Tredway

J.P. Morgan Asset Management announced that Chad Tredway, who was previously at the firm between 2008 and 2021, will rejoin the firm as head of real estate in the Americas, according to a press release.  

Tredway will succeed Mike Kelly, the group’s current head, who will retire. J.P. Morgan will also assume management of Trio Investment group, an institutional property investment firm with $250 million in assets, that Tredway founded after his departure from JPAM.  

“From his previous time at J.P. Morgan and his presence in the industry, we know Chad to be a visionary leader who brings a powerful combination of real estate expertise and leadership experience,” said Anton Pil, head of global alternatives for J.P. Morgan Asset Management, in a press release. “We’re excited to have him back at J.P. Morgan and are excited that Chad will extend Real Estate Americas’ industry leadership.” 

Among his previous roles at J.P. Morgan, Tredway was the head of real estate banking within the bank’s commercial banking unit. He also held roles within commercial term lending, where he helped build the largest multifamily lending portfolio in the US. He was previously an investment banker at William Blair and later UBS. Tredway earned a bachelor’s degree in finance and accounting from Loyola University Chicago.  

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“Chad is a strong cultural fit for our employees and clients and ready to take the reins of Real Estate Americas, one of the industry’s largest and most well-respected real estate asset management franchises, as markets approach an inflection point, a time of great opportunity,” said George Gatch, J.P. Morgan Asset Management’s CEO, in a statement. 

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