Goldman strategists say stocks are in for a wild ride as they don't reflect recession risk

Deutsche Bank’s Binky Chadha, meanwhile, expects the S&P 500 Index to slump to 3,250 points — 19 per cent below current levels — in the third quarter as a recession begins, before rebounding in the fourth quarter.

“Equity risk premia appear low considering elevated recession risk and uncertainty on the growth/inflation mix,” the Goldman strategists said, with stock drawdown risk higher amid weak growth and volatility, coupled with high valuations. Goldman’s analysis shows equities tend to rebound once inflation has peaked if a recession is avoided. In the event of a contraction, however, they decline another 10 per cent on average in the six to nine months after the peak.

They dropped massively all year based on risk from high rates. Ridiculous to suggest some bottom is not already factored into these prices.

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Goldman strategists say stocks are yet to reflect recession risk - BNN BloombergStock markets are in for a wild ride next year as they don't yet reflect the risk of a U.S. recession, according to strategists at Goldman Sachs and Deutsche Bank.
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