Barry Bannister, Stifel's head of institutional equity strategy who had predicted the S&P 500's drop earlier this year, thinks a bear market is coming, CNBC reported last week.
"Our models for the S&P 500 point to minimal price upside in 2018 and a bear market (-20%) in the coming year. What matters for investors is that any decline is likely to be unusually rapid and occur as a result of P/E compression, resulting from policy risks not weak GDP," Bannister wrote in a note.
"We're concerned the Fed's 2019-20 view grew more hawkish," he wrote. "We now expect deflationary policy errors to develop in 2018 to early 2019."
Indeed, the S&P 500 fell 2.1 percent on Friday to complete a 6 percent loss for the week and leaving it down 3.2 percent for the year to date.
However, while Bannister is wary of the impact of tighter monetary policy, the latest market declines appear to have been driven more by the prospect of a trade war after US President Donald Trump announced moves last week to implement tariffs on Chinese products.
Nobel Prize-winning Yale economist Robert Shiller warned that a trade war could lead to an "economic crisis".
No comments:
Post a Comment