09-17-2019, 09:43 PM
Some caution is warranted:
Quote:He warns a U.S. recession is on the doorstep, the Fed can’t help and the S&P 500 SPX, -0.31% is ignoring all of the warning signs. “We are cautious on stocks. We would argue you want to be defensively positioned [and] we would argue that the U.S. equity market has run way, way ahead of growth,” says Chadha. The S&P, he notes, tends to be “very strongly correlated” with indicators of cyclical growth like the Institute for Supply Management survey (ISM), which fell into contraction territory last month. It suggests the index should be at 2,600, not at current levels just below 3,000, which appear to price in a “good solid rebound” for the ISM. Elsewhere, he says annual U.S. jobs growth slowed from 2.5% in the middle of last year to 1.3% last month, marking the weakest expansion in 10 years, and nearing “stall-speed” for the economy. “Every time payrolls growth has gone below 1%, the U.S. has ended up in recession. We would argue the U.S. economy is dangerously close to...tipping into recession,” he said, adding that the fate of the economy hinges on one thing - the trade war.The S&P 500 should be 13% lower because a recession is coming, warns Deutsche Bank - MarketWatch