On Seeking Alpha, you run Reading the Markets, that's your investing group, your author name

on Seeking Alpha is Mock Capital Management.

Michael Kramer, it's great to have you on the show today.

Investors for the most part from the way I can look at it right and the only way I can

look at it is two things right I look at what is the market anticipating in terms of earnings growth for next year, and then I look at implied volatility levels, which tells me some sort of level of complacency or fear in the market.

A Vix at 14 is obviously suggesting there's no fear in the market, there's a lot of complacency.

Understanding what I understand about spreads and economics would tell me that the VIX is probably too low and will need to rise in 2024.

The other thing is that earnings are expected to grow by 10% next year, which I don't see as a possibility given that number one inflation is coming down, right, which is clear. We know that. I don't think anyone's been a

denier of the fact that we know that inflation rates are falling. It's obviously

the pace at which they fall and where they get stuck perhaps along the way.

But what seems clear to me is that probably by the time we get to the second half of

2024, you're going to see inflation approaching that 2% target, right?

What that means, though though is that companies will no longer have

pricing power to pass on to the consumer anymore which means they won't be

raising prices, which means that the whole reason the whole the whole way that the market gets to this 10% earnings growth rate is through

Profit margin expansion

But if you can't increase prices anymore and you have employment costs rising as noted by a higher average hourly earnings and higher inflation, you know, due to medical costs or health insurance, then we know that margins can't expand and margins will need to contract.

And so if you get a 5% sales growth number, you need margin expansion to get you to a 10%

earnings growth number. And what we're already seeing for the fourth quarter estimates is you've seen fourth quarter

sale earnings growth rates come down by about four percentage points since

the beginning of October and you've seen margin compression already

showing up in fourth quarter numbers and so I expect that to

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