Deutsche Bank rallied on Tuesday as its economists became the first major Wall Street analysts to say the US economy would soon be in recession. “Two shocks in recent months, the war in Ukraine and the build-up to rising inflation in the US and Europe, have led us to significantly revise our forecasts for global growth,” said Deutsche Bank economists led by David Folkerts. -Landau and Peter Hooper, wrote in a 68-page note to clients. “We now forecast a recession in the US and a slowdown in growth in the eurozone over the next two years.” However, it reflects growing concerns about the economy, especially as the US Federal Reserve moves aggressively to reduce business activity in its efforts to fight inflation. And the reversal of last week’s yield curve – a measure with a fairly good recession forecast – only encouraged those who expected economic growth to turn negative. Falling scenario in the stock market with a bear figure in front of the red price fall chart. And as TKer readers know, the recession is not big for stocks. The S&P 500 has fallen by an average of about 20% -30% during these periods. Deutsche Bank sees the stock market following the history book. From Binky Chadha Bank equity analyst (Chadha emphasis): We maintain our forecasts for the S&P 500 (5250) and Stoxx 600 (550) for the end of 2022. with a typical recession correction of 20% at the end of 2023. Our forecasts for stock supply-demand this year suggest that shares will should be well supported by strong inflows, position recovery to at least slightly above neutral and acquisitions, but this support will start to slow down with growth in the second half of next year. We see some but limited effects on European gains from the Russia-Ukraine war and many times over to recover. In 2023, we expect stock markets to hold well throughout the summer before the US falls into recession and stocks will adjust by a typical 20% as they start, before falling in half and regaining previous levels. The story goes on It may be easier for customers to swallow a 20% drop in stock prices when you call it a “correction”. But in case of any confusion, a 20% drop is more widely referred to as a bear market.
Reality check 🙋🏻♂️⚠️
I’m not going to tell you that a recession is not possible, in the same way I would not tell you that volatile markets are not possible. Recessions occur. And big sell-offs and bear markets are happening. This is why you register when you invest in the stock market. But I would warn you not to try to measure the market (that is, try to sell at the top and buy at the bottom). Most professionals have not even been able to do this successfully. Some of the biggest short-term gains in the market occur during periods of heightened volatility. Thus, those who overlook the market will end up losing significant profits that can cause irreparable damage to long-term returns. And the story goes that there is only a very short window between when stock prices peak and when recessions occur, which means there is a high risk of selling too early. “In the past, S&P had gains for up to six months before a recession began,” Andrew Garthwaite, head of Credit Suisse’s global equities strategy, wrote in a note to customers on Tuesday. Unfortunately, the information in the Garthwaite chart may only be marketable if you know exactly when the recession will begin. And this is almost impossible to do. By the way, if you decide to drop a knife on the market schedule and try to sell to avoid what may or may not be a sell-off associated with a recession, make sure you have a plan to repurchase. Remember: Shares are likely to never fall below the price at which you could have sold. – Related reading from TKer:
- These averages vary depending on how far you go back in history and how you qualify for price movements that can be associated with each recession. No matter how you measure it, everything is bad. A version of this post was originally published on TKer.co Read the latest financial and business news from Yahoo Finance Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube
