- The bearish forecast is in full force, even though the stock market is less than 1% away from its all-time high.
- Top economists and portfolio managers are warning of everything from an impending recession to a possible 65% stock market crash.
- Below, we’ve summarized the most-watched bear market predictions from across Wall Street.
Top forecasters, who have consistently taken a bearish stance even as the stock market is less than 1% from its all-time high, have dismissed the idea that a painful decline is imminent. Can not.
A weaker-than-expected April jobs report and a spike in weekly jobless claims have some warning of an impending recession and suggesting a stock market crash similar to 1929 is on the horizon. There is.
While these forecasts have so far come off as expected, they are still worth monitoring as a way for investors to exploit potential holes in the consistently bullish view that the economy, corporate profits and stock markets are doing well. be.
Here’s a roundup of the latest bearish predictions from Wall Street.
Gary Schilling: A recession by the end of the year would mean a 30% drop in the stock market
Wall Street veteran Gary Schilling told Business Insider this week that he expects a recession to materialize in the U.S. economy by the end of the year, as the labor market shows signs of weakening. And the weakening labor market will shatter investor confidence, causing stock markets to fall by up to 30%.
“If you look at all the kinds of speculation that we put out there, it shows a lot of overconfidence, and it usually gets revised and corrected hard,” Schilling told BI’s Jennifer Soh. Ta. “I think the safe bet is for the economy to start in the second half of this year, even if we’re not already in a recession.”
Schilling is credited with pinpointing the U.S. housing bubble of the mid-2000s, but most of his consistently bearish views over the past decade have yet to materialize.
John Hussman: It wouldn’t be surprising if the stock market crashed 65%
John Hussman, president of Hussman Investment Trust, issued a bearish warning on stocks last week, warning that the S&P 500 index is experiencing extreme price movements similar to those seen in the run-up to the Great Depression of 1929. However, he argued that the fear of missing out on purchases was a contributing factor. Take over investors.
“Statistically, the current series of market conditions looks ‘more like’ a bull market peak than at any point in the past century, with the exception of the 1929 peak,” Hussman said. “Extreme valuations, unfavorable internal market conditions, and a host of other factors” give us comfort in our bearish outlook on the stock market.
Hussmann said he wouldn’t be surprised if the S&P 500 index crashed 65%, which would erase a decade of stock market gains and put the index at about 1,800, or where it was trading as of February 2014. It will be level.
Hussmann famously warned about the dot-com bubble in 2000 and the housing market crash in 2008, but his consistently bearish predictions since then have yet to fully materialize.
BCA Research: Recession in early 2025 will cause stock market to drop 30%
BCA strategist Loukaya Ibrahim warned that a recession early next year could cause a 30% stock market correction.
Ibrahim told Bloomberg TV that the combination of higher stock valuations and slower growth will bring the S&P 500 index back to its October 2022 low of 3,600.
Ibrahim pointed to April’s jobs report, which added 175,000 jobs to the economy and revealed a decline in job openings, hiring and turnover, all of which point the economy to the downturn, not the uptick. He pointed out that this shows a change in the story.
“Ultimately, unemployment will rise further, leading to fears of a recession,” Ibrahim said.
David Rosenberg: Signs are growing that the economy may have a hard landing.
The United States could be “sleepwalking” into a recession as the labor market shows signs of weakening, according to top economist David Rosenberg.
“With calls about recession, people always ask when are we going to throw in the towel, but maybe it’s time for people to start asking when others are going to throw in the towel,” Rosenberg said. No,” Rosenberg said in the memo. week. “We are beginning to see a downward trend in the data stream that suggests an economic downturn may not be as far away as many believe.”
Rosenberg said the Sarm Rule is on the verge of issuing a recession warning after the unemployment rate rose to 3.9% in April and manufacturing activity contracted in 17 of the past 18 months. said.
“Don’t be complacent,” Rosenberg said. “The labor market is cracking, a slowdown in services activity is weighing on real-time growth, and forward-looking financial signals still suggest a slowdown is coming. “There is,” he said.
Rosenberg famously predicted a recession in 2008, but his consistently bearish economic outlook since then has been largely unexpected.
Countermeasure: A bullish perspective to balance the fatalists
One investment strategist who has been consistently bullish, and therefore correct, over the past few years is market veteran Ed Yardeni.
Yardeni said in a note on Friday that economic recession theorists’ forecasts of a recession are likely to be premature again after a weaker-than-expected April jobs report and weekly new jobless claims. Ta.
“The most widely anticipated recession in history is shaping up to be the longest widely anticipated recession in history,” said market veteran Ed Yardeni. “One day, some hardcore hardlander will say the right thing.”
But that day probably won’t come soon enough, according to Yardeni, as corporate profit estimates continue to hit record highs.
“Consistent with the robust labor market, future earnings rose to a record high in April,” Yardeni said. “Therefore, the argument that recent unemployment claims are just the beginning of a significant downturn in the labor market and economy is invalid. It’s unacceptable.” .
