A brief summer rally stoked optimism that the worst of the bear market is over, but Wall Street’s fourth drop in five weeks has highlighted just how volatile the market is. school is still there. Market watchers now expect rate hikes to be higher for longer on the back of a hotter-than-expected inflation report, while concerns grow about the health of the economy amid FedEx warnings on slowing global demand. Fund manager Cole Smead sees much pain ahead. He believes the bear market is still “early”, with further downside still to come. “We’re not going to end up with a garden-variety bear market. Squawk Box Europe” on Thursday, Smead, president and portfolio manager at Smead Capital Management, told CNBC. “First world problems” But Smead isn’t worried even though “there’s a lot of negativity floating around.” He believes investors are overreacting to current market conditions and that the world is more “ready” than ever for these “first world problems”. “The reason why they are just different problems than we were in the past. It was low growth in the past – when do we get out of this? Will our rates ever be higher? Now we’re worried about higher rates and high inflation because they are the world’s first problems, problems that we haven’t had in a long time,” he said. . And talking about a credit crunch is “ridiculous,” according to Smead. “This is something we can’t have in these markets. You can’t have a credit crunch. Banks are overcapitalised. We’ve heard a lot about this idea that there could be a crisis. credit in Europe and a bank in crisis. It’s unbelievable. It’s out of the numbers. It’s ridiculous,” he said. Household net worth in Europe and the United States has also never been higher, he noted, while the debt ratio is “on the floor”. Rejecting repeated claims that consumers are facing intense pressure amid inflation and higher interest rates, Smead shares a controversial view: that it is the rich who are “being bullied crush”, not those of low or medium means. “Now, who’s winning in this case? If you look at the lowest income quintile in America, you see the highest wage growth in the country. The wealthy have lost money this year, but the pay rise is good. The most will go to the poorest earners out there, and I look back at myself and think, this is a great economy,” said Smead. His comments come despite some data indicating that rising prices are outpacing wage growth. Last week, a survey from Bankrate.com found that more than half, 55% of respondents said their income has not kept up with rising household expenses. However, Smead believes the labor market is structured to ensure that low-income earners receive “the fastest labor growth.” That is “very evident” in other parts of the developed world, not just the United States, he said.