Dire predictions of imminent stock-market doom are a recurring feature since the 2008 financial crisis, and one fund industry executive has had enough.
He then calculated the consequences of shifting $1 from the S&P 500 stock market index to the Barclays Aggregate Bond Index, from the time of those “Armaggedonist” predictions.To be sure, of course, a recession will come eventually. But Cembalest’s point is that the recession would have to be incredibly severe for investors to be rewarded by heeding dire advice.
Still, Cembalest acknowledges some risks, including above-median equity valuations, weak leveraged loan underwriting standards, big fiscal deficits and the prospect of tougher regulation.Capitol Hill’s in the spotlight, as the House Intelligence Committee kicks off the public version of its impeachment inquiry while Federal Reserve Chairman Jerome Powell testifies before the Joint Economic Committee.
Markets also will be awaiting word on tariffs on European automobiles, with expectations the U.S. will delay a decision for another six months.