“Buckle Up” Because The Income Will Be Disappointing: Art Hogan
Profit season can take a turn for the worse.
Long-term bull Art Hogan warns that a storm of disappointing business forecasts and missed revenue targets is ahead.
“Buckle up,” the National Securities chief market strategist told CNBC’s “Trading Nation” Friday. “This will be the first time in the cycle that you will hear more companies leading down than up.”
Hogan cites headwinds linked to backlogs in the supply chain, inflation and labor shortages.
“There is going to be a real profit season for the haves and have nots,” Hogan said. “The well-to-do really have this pricing ability.”
He cites Snap’s third quarter results as an example of problems ahead. The social media giant reported a lack of revenue last Thursday and lowered its forecast – citing problems in its advertising business and disruptions in the global supply chain. Snap action is down 27% since the announcement.
“Aggregate demand exceeds aggregate supply,” Hogan said. “If you don’t have anything to sell, you’re probably not increasing your advertising budget.”
He urges long-term investors to resist the urge to react to volatility and believes they should take an investment approach at the helm, with growth on one side and cyclicals on the other.
“Any given earnings season is not the time to make a drastic change in your long-term investment plan,” he said. “But make sure you know what you have on the growth side and make sure you choose companies that are actually industry leaders and that are measured in terms of P / E. [price-to-earnings ratio] relative to price relative to income. “
He thinks the pain won’t last until the end of the year. Its S&P 500 year-end target is 4,700, implying a 3% gain from Friday’s close.
“We have a long trail ahead of us, and I think a lot of the demand that has not been met this year extends into 2022,” Hogan said.