wells far wego's chris harvey urging investors to sell before may and go away, calling for a meaningful correction in stocks. that was, of course, before a couple of good back-to-back reads on inflation mr. harvey is here with us on set to explain welcome. >> thank you, scott. >> i'm glad we finally corralled you. when i saw this note, we were like let's get harvey. this is i'm quoting from your note, okay, we're within spitting distance of our 4,200 s&p target now shifting direction. expect a 10% correction in the next three to six months, a front end inversion, and a banking crisis that will likely take an economic toll triggered our reversal and here we are, the market still looks like it wants to go higher dow is up 400 points what say you >> what i say is the same thing i said before. we're going to have a correction we're at 4,200 our price target's 4,200 that's 20 times a 210 number that is -- those are both really, really healthy numbers i can't get a bear case from this level, and what we expect is we expect a pullback over the next three to six months, whether it's related to

chris harvey at wells fargo has a 4,200 year end target. a 10% correction at 3,700 in the next three to six months so i'll tell what you the problem is put up the estimates for earnings and i'll show you why this is causing a lot of anxiety with the strategist community. put up the 2023 earnings estimates. the problem is in the second half of the year, so we have $56.84 for the q3. there it is. look how low the number is the first quarter, look at the third. $56.84, is a historic record, all-time for the print $58 is even bigger here is the problem. to believe these numbers, you have to embrace the soft landing idea because that's an 18 multiple right there add that all up it's $219. that's where the analysts are. the strategists, most of them are $200 to $210 they're trying to distance themselves from this soft landing hypothesis that you have to believe to have that happen you have a recession multiple, 12, 13, 14, we're in the low 3,000s not at 4,100 somebody is wrong here and the strategists are trying to get some distance. >> i see you

i just finished a conversation with somebody pretty positive on the market, but then i have chris harveys sell before may and go away, it's not so great what's your take >> yeah. i would agree more with the latter since the s&p 500 had gone to 4100 in december, we shifted from a positive buy which we adopted in the september, october period when the index looked attractive at 35, 3600, to one that's take your chips off the table and increasingly get getting more negative as we move into this year and see the rotation we've seen, where the risk-reward does look very unattractive at these levels and the asymmetry to the downside, even in our base case view, a retest of 3500, is attractive and the risk that comes with slowdowns and recessions, nonlinear, feedback loops that could kick in. at these levels, we don't like holding risk here. >> you have these events like tomorrow morning which could throw a wrench in what technical analysis would tell you to do. isn't that correct >> with the cpi print coming tomorrow we not only look at the world through a technical lens, we do cross-market mo

in terms of where we are now and in a week where the cpi and ppi both were pretty good reads, chris harvey has been leaning on we will have a sell-off, we will have a correction, we thought the market would get to 4,200, and it was kind of on the doorstep, right? and this year's ppi, cpi rally does not change our advice to sell before may and go away. he had made that call and on with us to explain it even further and thinking the post-svb impact on bank lending and demand slowdown will make for a difficult road ahead, mid this year. what do you think? and i want your opinion on the bank lending, too. >> first of all, i don't like the disproportionate representation for wells fargo on the panel i don't know the difference. but whatever and i mean listen, there is a lot still to be nervous about. i don't think that broader fundamental landscape is any different than it was a day ago, a week ago, a month ago. the bank reports are obviously positive and the fact that the economy is not rolling over is a positive but again, those of us in this camp that have been in this camp, that are new to

guy, the valuation question, you were trying to push on chris harvey about that. >> i don't think -- perceived to be that way, but this was -- there were some growth in these names for a very long time now, they've gotten expensive, but they've historically been expensive. eli lilly, there's been a problem on valuation for five, six years. they continue to grow into it. merck, tim talked about it, and did karen, was a $68 stock i think it closed at 113 today amgen, the best stock out there, that's way too cheap in this environment, so, though it's perceived to be safety, i actually think it's still investable as growth names, too. >> yeah, courtney, you look this as a defensive play? >> yeah, i do. our acronyms at the beginning of the year, united health and merck. those are two of the top holdings in there. and people were pessimistic on these after there was so much optimism last year and people started to rotate out of that trade. i think the fundamentals continue to look really strong and i think -- i don't think they're overvalued here, to guy's point, and i think they are going

chris harvey saying prepare for a 10% correction that will happen in the next 3-6 months, but the losses are not yet over for american equity. manus: a big draw on u.s. real estate stocks. lots of people saying no matter where everything goes today on cpi, you're going to look at more pressure on this dollar and that is a narrative that is building very strongly. will it be the time for the banks to step up relative to the volatility in the bond market, can we expect an explosive move in equity volatility? price cuts coming through from some of the steel mills. it's a little about softness in china. the two year benchmark is up above 4% at the moment. what will that cpi print really due to the short end of the curve? dani: let's get to that story and other top stories with our reporters from around the world. we will talk cpi, fed the vergence and u.s. banks still in the spotlight. manus: bowman sees stocks dropping by 2% year over year. let's get to valerie in terms of what we can expect. where should we be more focused, headline or core? >> i say definitely core. broadly they had nine

equities will be short lived that's the warning from wells fargo's chris harvey in a note yesterday heaid the s&p 500 is set for a 10% correction in the next six months -- excuse me -- three to six months, which would take the index to right around 3700 or near november lows it will be driven by worsening economic conditions, a function of aggressive monetary policy, and a consumer that's becoming more and more reliant on credit to sustain spending. harvey said assuming the cycle ended in march, the relief may be reflected in stocks let's get another perspective on this let's bring in craik johnson of piper sandler. also great to have you welcome. >> thank you. >> we look at the november lows. you're keeping your eye on the december lows and the fact we haven't returned though is what do to numbers tell us about the november lows as opposed to the december lows? >> we've been talking about a hop, a drorngp, and a pochlt we think the market can trade up to 4200, 4300 on the s&p 500. yeah, we would agree with the wells fargo strategist that there can be a drop, but that drop will most li

. >>> "closing bell" a couple of hours from now we have a big show chris harvey put out the note everybodyng about. he changed his outlook on the market in the near term. we got him today he'll tell you what he sees going forward. and top financial adviser chris toomey of morgan stanley will be with us, as well we can't wait for that 3:00 eastern >>> let's do "final trades." what do you have for us? >> xbi all the gene therapy names are out today. xbi trades between 75 and 90 you could by it around 80, sell in september 90 calls, with about a 3.5% call premium. >> all right josh brown, back in the house. what do you have >> yeah. ita is a couple of dollars away from breaking its precovid high. we live in a dang rerous world. be invested in defense and aerospace stocks >> farmer jim? >> thermal fisher. there is a lot of good subsectors, and they are a high quality company. >> rob >> principal financial group we bought it two weeks ago >> i'll see you on "closing bell." "the exchange" is now. ♪ ♪ >>> hi, everybody. welcome to "the exchange." as we roll into the back half of this trading day

tom: interesting to see what chris harvey has to say. will be catching up with him shortly. tom: on radio and television, stay with us. this is bloomberg. tom: bloomberg surveillance. we welcome global wall street and the rest of you on radio and television. the first working day of the second quarter of 2023. it has been extraordinary so far this year. feels like the whole year was in three months with the banking crisis and such. we move forward and we move forward in economics, finance, investing. with jobs day coming up on friday, ism statistics today. all of that coming to federal reserve policy and what is so important to understand, this is how at the arch of st. louis on the mississippi river. it is important when you are a st. louis cardinal. adam wainwright of the st. louis cardinal sang the star-spangled banner on opening day for the cardinals, which clearly sets us up for next year on opening day, michael mckee. we expect james bullard of the st. louis fed to sing opening day for the cardinals. michael: i suppose i could make

chris harvey, listen, also got a 4200 price target.sk-reward over the next six months is skewed to the downside and we expect a 10% correction, s&p down to 3700 people are tripping all over themselves to lower their earnings estimates show you the numbers for the four quarters here it's $219 where the analysts are, but strategists, 200 to 210. see the q3 and q4, $56 q3 that would be a record number for a quarter and so would q4. to believe this number, this 219, you have to believe in the soft landing because that's what's there in the fourth quarter and third quarter, the analysts are pricing in that we're going to get a rebound because we're not going to have the downturn that's the soft landing. you have to leave that to believe in the 219 numbers and nobody wants to believe that so that's why the strategists are at 200 or 210, kostin is right around there nobody wants to embrace the soft landing. this is why, because everyone is tripping over themselves to lower the numbers, i'm optimistic and think the market has a chance to go hi

. >> oh, the chris harvey stuff. >> man >> yeah. >> i read that and was, like, wow.ith that >> it was interesting last night, yardeni, pretty reliable bull, who has argued for a long time that october was the low, said that if the fed continues to hike, we'll join the bears. >> i was talking with my team, and jeff marsh said, wow, he's where you are, and i said, i like to think because i logged that work, i'm where he is i respect his work immensely, and i thought that was very cogent analysis. he's very thoughtful he did not make that -- that was not an idle, like, look, they do it another quarter it was, like, no, we're skating on thin ice here very good piece. very powerful. >> in terms of negative announcements today, american, what's up with the -- american airlines, down beat profit outlook, jim >> ahead of delta, which i think going to be good tomorrow. i mean, delta, i don't know. we got to do some work on -- what is -- why are they not making more money? >> my god, i took seven different flights in the course of, i don't know, eight days, nine days. every si