Wall Street Singing for short US stock is getting louder and louder.
On Tuesday, Citigroup quantitative strategist Alex Saunders, etc., said in the report that U.S. stocks priced the recession higher than any other asset class and could face more declines.
They wrote in the report:
The US stock market reflects the greatest risk of recession, but it is still not enough, and earnings expectations need further adjustments.
U.S. bond pricing has the least risk, but given the hawkish stance of the Federal Reserve Feder , it will take some time for bonds to respond to the risk of recession. The team believes that no asset class is overpriced on recession risk, but the stock market reflects the situation most clearly: "This time is unusual because stubborn inflation puts pressure on fixed-income products, which usually rebound when recession risks rise." A media survey of economists showed that the probability of a recession in the United States is 60% higher than 50% a month ago. Analysts Eliza Winger and Anna Wong are even more pessimistic, believing that the possibility of a U.S. economic recession in the next 12 months is 100%.
Although US President Biden has said that the economic downturn is "very mild", high inflation and the Federal Reserve's hawkish stance have exacerbated the possibility of an economic recession, causing the U.S. stock market to suffer a heavy blow this year.
JP Morgan also put forward a similar view to Citi .
On Tuesday, Goldman Sachs strategist David J. Kostin and others also wrote in the report that U.S. stocks "at this time, there is no reflection of the risk of a U.S. recession expected by many portfolio managers in the coming year."
Goldman Sachs also tends to be defensive in sector allocation; while Citi suggests investors take trend tracking as their current main strategy, saying that this strategy has performed well during periods of slowing down and stagflation.
US stocks entered the technical bear market since June, and then rebounded slightly, but it continued to fall since August. As of Tuesday's close, the decline of the S&P 500 has widened to 22% this year; meanwhile, the yield on the 10-year U.S. Treasury bond has climbed more than 250 basis points this year.
As the U.S. stock financial report season has begun, Wall Street has frequently warned about the possibility of further declines in U.S. stocks.
Bank of America wrote in a report on Monday that the S&P 500 component company profits were lower than expected, and the proportion of companies that expected future profit reductions gradually increased, which is usually a warning of the future performance of US stocks. Bank of America believes that US stocks may still have about 18% downside.
According to the bank's statistics, among the S&P 500 stocks that have released financial reports, only 42% of the companies reported that both revenue and profit were higher than expected, the ratio hit the lowest since the outbreak of the new crown epidemic in the first quarter of 2020 and was also lower than the historical average of 47% in the first week of the financial report quarter.
Wall Street generally disagreed with the rebound of US stocks, believing that in the financial environment that continues to tighten, as listed companies make more and more difficult profits, the rebound of US stocks is not supported by fundamentals , and is more of a bear market fluctuation.
Morgan Stanley strategist Michael J. Wilson said on Monday that the S&P 500 index fell 25% this year and is testing the "important support bottom" of 200-week moving average , which may trigger a technical rebound, but maintain a long-term overall negative view of U.S. stocks, and it is expected that "corporate profits will slow sharply" in the next 12 months.
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This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions in this article meet their specific circumstances. The market is risky, so you need to be cautious when investing. Please make independent judgments and decisions.
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