While we are currently experiencing a 10% U.S. stock market correction for the second time in the past year, we do not expect the recent correction to turn into a bear market.Whew, and to think I was worried.
The bulk of these indicators do not currently indicate a greater-than-50% chance of a U.S. recession, although there are pockets of weakness. Globally, we see continued growth in Europe and only a modest deceleration in China, while other indicators are at levels associated with a low probability of global recession.
we expect the recent volatility will ultimately reflect a correction, not a longer-term bear market. Severe bear markets rarely happen without recessions. Also, stock prices typically exhibit rich valuations just before big price drops, but stock prices now are at average levels relative to a variety of valuation metrics. Finally, the U.S. market does not appear full of “hot money”.
Friday, January 15, 2016
One Voice Against Panic
Charles Schwab says we're not in a bear market, despite the 8-10% drop in market indices since the first of the year. Excerpts [bold added]: