Direct predictions for an impending stock market crash are a recurring feature after the 2008 financial crisis, and one executive of the stock industry has had enough.
Michael Cembalest, Chairman of JP Morgan Asset Management's Market and Investment Strategy, rounded up to apocalyptic predictions by a number of commentators, including renowned investor George Soros, bond market giant Jeffrey Gundlach, activist Carl Icahn, and New York Times colonist Krugman.
He then calculated the consequences of the $ 1 transfer of the Barclays Stock Market Index to the Barclays Bond Index as of these forecasts to Armageddon.
As the chart shows, losses are as high as 60%.
To be sure, of course, there will be a recession. But Cembalest's opinion is that the recession will have to be extremely severe in order to reward investors by taking terrible advice. "Using rough math, it will take a sustainable, perennial bear market with 35% -45% declines from peak levels to reverse many of the possible losses shown in the chart," he says.
In Call of the Day Cembalest does not expect the next recession to be so bad, pointing to higher levels of capital in US and European banks, stronger balances of US households, increased levels of foreign exchange reserves. emerging markets as well as the reduced reliability of foreign capital and the low level of new capital supply in the United States.
However, Cembalest acknowledges some risks, including above average equity estimates, poor loan signing standards, large fiscal deficits, and the prospect of tighter regulation.
The Capitol Hill is in the spotlight when the House Intelligence Committee launches a public version of its impeachment investigation while Federal Reserve Chairman Jerome Powell speaks.
Powell may emphasize that the US is in a "good place" economically and that the central bank does not want to reduce it further after three interest rate cuts have been made.
Markets will also wait for word on European car tariffs, with the expectation that the US will delay the decision by another six months.
Consumer price data for October are set at 8:30 AM Eastern. The Market
After The Dow Jones Industrial Average
DJIA, + 0.00%
produces exact zero motion, US US futures
were lower on Wednesday.
Reflecting the transition to safer assets, gold futures
GC00, + 0.89%
won, and the yield on the benchmark 10-year Treasury
fell 4 basis points. Yields are moving in the opposite direction of prices.
The Hang Seng
dropped as violence continued in Hong Kong and European stocks
Two people in China have acquired the plague.
Russian Vol. The Whale Prison is gone.
The Mars pastry company will introduce a vegan version of its Galaxy candy bar
. Introducing a trade war – the card game.
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