Slowing economic growth and an inverted yield curve has many investors worried about a potential recession in the next year or two, but also has them excited for the heady stock-market returns that have often been sandwiched between an inverted yield curve and the subsequent economic downturn.
“We already see evidence of payroll growth slowing, retail stales beginning to weaken and less U.S. demand for imports, at the same time that we’re seeing signs of a corporate earnings slowdown,” Jones said, arguing that these weren’t traits the economy displayed at the time of the 2006 yield curve inversion.
“The 1973 rerun seems plausible to us, even though we are projecting a sharp slowdown in growth rather than a recession. Indeed, we continue to forecast that the S&P 500 will end 2019 at just 2,300, roughly 18% below its level now,” wrote Jones’s colleague John Higgins, in a Thursday research note. Check out: The ‘volatility cavalry’ is coming for the stock market, other assets, according to this chart
There’s a lot going on and quite a bit of uncertainty. Market is not going to look pretty.
We'll watch and see. I'm always looking for a buy season.
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