Taps Coogan – February 27th, 2023

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Legendary short seller and founder of Kynikos Associates, Jim Chanos – perhaps the last great short seller to have their reputation survive the Post-Global Financial Crisis world, recently spoke with CNBC about his concern that earnings expectations are coming down fast.

Some excerpts from Jim Chanos:

“If we go back to the beginning of the year… there were three things that the market pricing was discounting. It was looking for 12% earnings growth this year. It was looking for a reduction of inflation to 2%-3% by the end of the year and it was Fed easing in the second half of the year. Two of those three are gone… the inflation outlook and the Fed. Investors are still pretty sanguine on earnings… but very interestingly, earning estimates for the S&P… have been coming down by about a dollar a week since the beginning of January. At the beginning of the year, people were looking for about $227 on the S&P and today they are looking for $220. Now, the ‘good’ news is the brought down fourth quarter numbers too (Q4 2022) to 196 so we are still looking at 12% growth but we are getting there the wrong way – by shrinking the numerator and the denominator… We continue to see rallies by lower quality stocks… and so we get these relief rallies and… then things kind of sort themselves out…”

There is more to the interview so enjoy it above.