Strategists Look Past Third-Quarter Earnings to Home In on 2022
(Bloomberg) -- Wall Street strategists begin the third-quarter earnings season with an eye on the next three months and 2022, looking for reasons to continue -- not ruefully end -- the bullish sentiment that has defined 2021.
“What most people will be focused on is the future,” Monica DiCenso, JPMorgan Chase & Co’s head of U.S. equity strategy, told Bloomberg TV’s Surveillance on Tuesday. “People are not taking down too much of the risk. They want to be long. They want to be there for the growth that we expect next year.”
It’s the latest iteration of FOMO, or Fear of Missing Out. Investors and analysts know companies in the next few weeks will disclose higher costs linked to the pandemic disrupting supply lines and labor pools, causing a drag on quarterly results. But they view those prospective headlines as something that will be -- to borrow a word -- transitory.
“You’re going to hear a lot about the impact in this quarter,” said DiCenso, but she sees these issues as a “one quarter, two quarter impact, especially as it relates to the delta variant.”
Many Street strategists expect investors to take the news in stride. Their forecasts call for any goods shortages to eventually be managed, even if it means consumers simply stop paying higher and higher prices.
“We see inflation settling back down next year,” Brian Nick, chief investment strategist at Nuveen, the wholly owned TIAA subsidiary, said on Surveillance. “The number one driver of inflation has been demand and we see demand coming back down to Earth.”
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