markets arent accounting for a possible profits recession chief investment officer says markets arent paying adequate attention to the potential of a profits recession in the months ahead said richard bernstein chief executive officer and chief investment officer at richard bernstein advisors a profit recession occurs when profits growth turns negative even if the overall economy holds steady and they can occur more often than an economic recession bernstein told cnbcs power lunch on friday youre still seeing a lot of enthusiasm for lowerquality bonds youre still seeing a lot of enthusiasm for more speculative stocks he said  that says the market isnt really paying attention to the potential for a profits recession which i would argue is much more important right now as the probability of a profits recession rises bernstein points investors toward stocks focused on necessities rather than consumers desires that includes consumer staples healthcare and companies that pay quality dividends youre not hearing too many people talking about going to bars anymore but youre hearing people talk about the importance of necessities he said thats normal for this kind of environment in next years consumerled recession these sectors stand out according to citi citi us equity strategist scott chronert is coining next years mild recession a consumerled recession because it will fall on the consumer sector he told cnbc friday yet while wall streets earnings expectations are too high and will need to come down there is some good news he said on cnbcs squawk on the street we think we can navigate a recession next year with lesser earnings degradation than would typically be the case chronert said there are certain sectors that will stand out in this environment including technology he added techs inherent growth will become somewhat defensive as next year unfolds and earnings will become more resilient at the same time we get to a point where we are looking at lesser fed rate overhang on valuations we think the tech sector is poised for a revaluation higher he said there are also several mega cap stocks particularly in the consumer discretionary sector that are programmed for stronger earnings next year chronert said he also believes the financial sector will show fairly resilient earnings growth next year its been a miserable year for those entering 2022 holding stocks and bonds but theres one silver lining investors can wrap themselves in dividend payouts are at all time highs up 67 in the third quarter to a record 1462 billion in the us and higher by 7 globally to 4159 billion thats the conclusion of money manager janus henderson which draws its numbers from its inhouse janus henderson global dividend index of 1200 stocks domestically investors can thank financials which accounted for almost 40 of the growth in dividends the largest single contribution by industry group internationally oil companies and their record profits accounted for a large measure of dividend growth excluding the effect of the strong dollar international dividend growth was even stronger in the third quarter expanding by 10 janus said the majority of international oil dividends were made via special payouts rather than increases in regular quarterly or semiannual dividends they were especially strong in emerging markets and asia and north america with brazils petrobras pbr making the biggest increase janus which runs 275 billion in assets upgraded its dividend outlook as a result of the third quarter it now forecasts global dividends of 156 trillion up an underlying 89 yearoveryear vs a 153 trillion estimate previously in midaugust janus forecast underlying dividend growth at 85 the longterm dividend growth average is 56 the underlying estimate adjusts for onetime special dividends exchange rates payment dates and companies entering or leaving januss index a set of forwardlooking economic data is pointing more intensely toward a recession the conference board reported friday the boards leading economic index fell 08 in october bringing its cumulative sixmonth decline to 32 after rising 05 in the previous halfyear the us lei fell for an eighth consecutive month suggesting the economy is possibly in a recession said ataman ozyildirim senior director of economics at the conference board the downturn in the lei reflects consumers worsening outlook amid high inflation and rising interest rates as well as declining prospects for housing construction and manufacturing according to the boards projections the economy is likely to drift into recession by the end of this year with the downturn lasting into the middle part of 2023 the index uses 10 metrics including manufacturing hours worked jobless claims building permits stock market indexes and credit spreads to look at future conditions jobless claims have edged higher over the past several months while building permits have sunk and credit spreads remain wide some economists worry about the signal that the lei is sending particularly considering the federal reserves ongoing effort to tame inflation by raising interest rates historically the central bank has loosened policy during times of economic stress but that isnt the case this time the sp may see another pullback but it could be the last one says sofis young the sp 500 is up about 10 since the end of september as valuations are trading higher than the five 10 and 15year averages according to liz young chief investment strategist at sofi if this turns out to be a bull market rally it could be a really powerful one but another pullback could be on the way she said it just doesnt feel right for the sp to be trading at that level in a time when were really just starting to hear about earnings contractions and layoffs young told cnbcs squawk box friday morning i would expect that we probably give some of that back but the good news is if we do have another pullback in the market i think its the last one weve now seen a lot of the economic data start to crack and when you think about the timing of how things usually work the market typically falls before the economy really bottoms she added what we need to see is that economic data come down enough that the fed gets comfortable with the idea that inflation will actually be taken care of