Graphic S&P 500 index intervals 1 week
“Today I don’t see anything in my collection of metrics that tells me that the US stock market is close to the bottom,” David Rosenberg, former chief economist at Bank of America Merrill Lynch, told MarketWatch in an interview.
According to the expert, in the current realities, the optimal portfolio should include bonds, gold, shares of manufacturers of essential goods, as well as securities selected in accordance with the so-called “Dogs of the Dow” strategy.
Rosenberg is one of those experts who have been arguing for the past year that the Fed will do exactly what it promises, so investors should take the statements of its representatives seriously and take them literally.
“The recession is just beginning,” Rosenberg notes. “The market usually bottoms six or seven months into a recession, when the Fed is already cutting rates.”
The expert believes that the Fed can still take a break and even start cutting rates this year. However, before that, the S&P 500 may fall from current levels by 30% and find a bottom in the 2900 area. After that, in his opinion, the US stock market will become attractive again.
“Friday’s – very strong – report on the US labor market for January provoked a large-scale reassessment of expectations for the dynamics of the federal funds rate,” writes Oleg Syrovatkin, a leading analyst at the Global Research Department at Opening Investments. “If on Thursday the futures market took into account in prices that at the end of 2023 it will be 4.40%, now this indicator has jumped by 40 b.p. up to 4.80%. This does not look like a good sign for risky assets in general and the US stock market in particular.”
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On this topic:
Investors are bullish on stocks, but they’re wrong – Morgan Stanley
Fed won’t support stocks with rate cuts – Goldman Sachs
The mania in the US stock market does not yet portend its collapse – Bloomberg Intelligence
Morgan Stanley warns US stocks risk falling 22%
The US stock market rarely declines two years in a row, but 2023 could be an exception
