Renowned short-seller Jim Chanos sees a dangerous trend in the market.
“I’ve been on the road [since] 1980 [and] “No bear market has ever traded above 9x to 14x earnings of the previous peak,” the founder of Chanos & Co. told CNBC.fast money” on Monday.
His latest warning comes in the middle of earnings season, two days before the Federal Reserve’s decision on interest rates and four days before the key January jobs report. According to Chanos, the market will not be able to overcome rising rates and falling corporate profitability.
“Things are not cheap,” said Chanos, who acknowledges that the stock is still cheaper than it was 18 months ago. “But people are pricing in a very nice Goldilocks scenario.”
so far this year S&P 500 is up about 5%, with the media, technology And airlines profit led. The index had closed one per cent lower at 4,017.77 on Tuesday.
Chanos notes that the market is expecting 12 percent growth in corporate profits this year, 2 percent inflation and a Fed rate cut over the next six to seven months.
“It’s pretty much nirvana if you’re a bull,” he said.
Chanos, Who said he doesn’t try to time the market, It is doubtful that a bullish scenario will emerge.
“If you think earnings are going to hit $200 now, that’s way too low,” Chanos said. “It’s 1,800 to 2,800 [on the S&P 500], We’re not even close to that.”