Higher interest rates have sharply increased carrying costs while lowering spending and investment through the economy. Both revenue and profit numbers are broadly in retreat and the urge to cut costs is intensifying.
There will be a bottom in equity markets, but it has never come before central banks have resumed easing monetary conditions. Recessions, typically follow the final Fed hike within about 6 months and 2 years after the first hike. In this cycle, that would suggest a recession by the first quarter of 2024 with a stock market bottom several months later. The segment below offers some further insight.
Doug Peta, chief strategist of U.S. investment strategy at BCA Research, joins BNN Bloomberg to discuss his view on markets. Despite softer than expected PPI and CPI in the U.S. Peta still sees a recession in the first half of 2024. He also expects double-digit declines in earnings, which he says will power a double-digit decline on SPX next year. Here is a direct video link.
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