Finance

Jeremy Grantham, Jeffrey Gundlach and other market veterans predict stock market pain and predict future recession


Some market experts predict that the stock market will fall and that a recession will come.David Karp/AP

  • The S&P 500 is near all-time highs as markets shake off worries about the economy.

  • Some top investors and economists are still warning that stocks will fall and a recession will come.

  • Here’s what Jeremy Grantham, David Rosenberg, Jeffrey Gundlach and Gary Schilling have to say.

S&P 500 Index Breaking through 5000 points For the first time this week, investors are celebrating strong corporate earnings, slowing inflation, growing prospects for interest rate cuts and the fading threat of recession.

However, some major investors and economists still believe that the stock market will plummet and the United States will fall into recession. Here’s a summary of their latest dire warning:

Jeremy Grantham said: “The stock market is going to have a tough year.” Intelligent consultant Recently, he noted that U.S. stocks are “almost ridiculously expensive” compared to stocks in other countries.

Market historian and co-founder of fund management company GMO Sounded the alarm In early 2022, there will be a “super bubble” in stocks, houses, and other assets.

He is now warning that stocks could be hit not only by shrinking valuation multiples but also by lower corporate profits as consumer spending and growth slow.

“The economy is going to get weaker. At least we’re going to have a mild recession,” he said.

Grantham added that the raging conflicts in Ukraine and Palestine created a “scary” geopolitical backdrop that could spell trouble when asset prices reach record highs: “There are a lot of negatives right now.”

“The complacent bull market will unravel as a recession that few foresee and few are prepared for eventually emerges,” says David Rosenberg. expected on LinkedIn last month.

The president of Rosenberg Research and former chief North America economist at Merrill Lynch described the 2022 stock market rout as an “appetizer” for what might happen once investors price a recession into markets.

Rosenberg said the economy emerged from the slump last year as consumers drained their savings and wielded credit cards, employers didn’t lay off workers after experiencing pandemic labor shortages and the federal government pumped money into the economy.

He pointed to retailers and homebuilders scrambling to stimulate demand with promotions and discounts, as well as governments spending aggressively at a time when economic growth and employment appear to be strong, as signs of trouble ahead.

Jeffrey Gundlach tells Pensions magazine that stocks and other assets are “on fire” at a time when more Americans are behind on their credit card bills and the troubled commercial real estate industry is looking increasingly dire ” and “rising like crazy” & investing in Recent X Spaces interviews.

The billionaire chief executive of DoubleLine Capital lamented the market’s “laziness” and “complacency,” comparing it to the dot-com and real estate bubbles that created legions of undiscriminating investors.

Gundlach said the S&P 500 is blatantly overvalued and could pull back at some point, but not necessarily in the short term.

He added that he was unwilling to ignore the two biggest signs of a recession, an inverted yield curve and a secular decline in leading economic indicators: “I think we will be in recession by the middle of this year.”

“Stocks are very expensive and very distorted,” Gary Shilling recently told Business InsiderIt added that the S&P 500 could plummet 30%, falling below 3,500 points, its lowest level since late 2020.

Merrill Lynch’s first chief economist resigned in 1978 to run his own consulting firm and was known for his many contributions. Correct market judgment the past forty years.

Shilling predicted a recession this year based on “classic signs” such as an inverted yield curve, continued declines in leading economic indicators and weak small business employment data.

He also pointed out that consumers have effectively depleted their savings during the epidemic, the resumption of student loan repayments has further squeezed incomes, and an economic soft landing is extremely rare.

In addition, Schilling said the Fed’s decision not to cut interest rates until inflation is firmly under control, as well as labor hoarding to slow layoffs and prevent interest rate cuts, could exacerbate the recession.

Read the original article business insider



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