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Compass pointing towards “RECESSION”

Market Insider: April 19, 2022

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U.S. Money Reserve

Apr 19, 2022

In the first quarter of 2022, the S&P 500 declined 4.6%, and the Nasdaq fell 8.9%. According to fund managers surveyed by BofA Merrill Lynch Global Research, this dip in market performance could be a preview of things to come. Michael Hartnett, the bank’s chief investment strategist, characterized the sell-off in January and February 2022 as merely an “appetizer, not the main course, of [2022]” in terms of market disruption. The survey’s results are not an anomaly; multiple analysts are saying that a recession might be on the horizon.

Banks and other institutions are expecting a recession.

The results of Bank of America’s April Global Fund Manager Survey, released on April 12, 2022, indicate a groundswell of negative sentiment. Of the respondents, 81% believe the Federal Reserve will raise interest rates too fast for the economy to handle, and only 29% of respondents are optimistic about global economic growth.
A week earlier, on April 5, 2022, economists from Deutsche Bank predicted that a recession will come by the end of 2023. Matthew Luzzetti, chief U.S. economist for Deutsche Bank, wrote in a note, “We no longer see the [Federal Reserve] achieving a soft landing. Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession.”

At the beginning of April, Goldman Sachs analysts predicted that the S&P 500 will rise no more than 4% by the end of 2022. Conversely, they also predicted that it may fall as much as 21%. Goldman’s chief U.S. equity strategist, David J. Kostin, noted that a recent inversion of U.S. Treasury yields combined with stagflationary forces mirrors the harsh economic conditions of the late 1970s.

Prominent experts have also raised recession concerns.

Financial experts examining a laptop and financial documentsJeffrey Gundlach, chief executive officer and chief investment officer of money management firm DoubleLine, says a “calamity” may be coming for markets in 2023. Speaking on stage at the Exchange ETF conference in Miami, Gundlach pointed to the recent inversion of U.S. Treasury yields as a reliable recession indicator and compared current market conditions to those experienced in 1999 before the dot-com crash.

Steve Forbes, chairman and CEO of Forbes Media, says that the U.S. economy is “troubled.” In an appearance on Fox Business’s Varney & Co., Forbes argued that both government monetary policy and Federal Reserve fiscal policy contribute to inflation and other economic issues. When asked if he foresaw a recession, Forbes stated, “Yes, now whether it is an official recession, where you have two quarters in a row [of negative economic growth], who knows? But the economy is going to decline.”

Consumers’ expectations of a recession are on the rise.

A survey conducted by CNBC on March 23 and 24, 2022, found that 81% of U.S. adults are worried about a recession happening this year. The survey also found that recession concerns are high across political party lines, with 91% of Republicans, 73% of Democrats, and 81% of independents all believing the likelihood of a recession is high.
With recession warnings coming from multiple sources, consumers are paying attention to how their own portfolios may be impacted in both the short and long term.

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