🔒 Financial Times perspective: How to be a bear
The bear case. Just as with yesterday’s bull case, we don’t necessarily endorse all of the arguments that follow.
The bear case. Just as with yesterday’s bull case, we don’t necessarily endorse all of the arguments that follow.
Roubini expects the US and global recession to last all of 2023, depending on how severe the supply shocks and financial distress will be. During the 2008 crisis, households and banks took the hardest hits. This time around, he said corporations, and shadow banks, such as hedge funds, private equity and credit funds, “are going to implode.”
In the same way that market timers put off selling until interest rates begin rising; they also wait until ‘capitulation’ before starting to buy once more.
In absolute terms, investors are most bullish on cash, health care, energy and staples, and most bearish on equities, UK and Eurozone stocks, as well as bonds.
Personally, I expect this to be merely another bear market rally. But there is no denying that we’re closer to the bottom than we were.
If you’re still holding on despite the wild ride that global markets presented in 2022, you might want to pat yourself on the back.
With stocks on sale, many investors are eager to get in at the ground floor of an eventual rally. That means they are focused on any sign of a development that would spark a turnaround.
It’s the first time since July that the S&P 500 wiped out an intraday decline of more than 2%, yet another of the wild swings is a signature of 2022’s stock market as traders struggle to guess the Fed’s policy path and its impact on the economy.
At the low last month, the S&P 500 was trading at 18 times earnings, a multiple that is above trough valuations seen in all previous 11 bear cycles.
With a lumbering bear market whipping up volatility, the biggest traders are wringing stock options for all they’re worth.