Heron Wealth Webinar: Do Bearish Stock Market Moves Forecast a US Economic Recession?
In 1966, Economist Paul Samuelsson famously quipped, “The Stock Market Has Predicted Nine Of The Past Five Recessions” Updating Samuelsson's calculation through 2022, we see that the US stock market has correctly forecast 15 of the last 8 recessions.
At present, the NASDAQ is in a bear market down 22.7% from the last fall’s record level while the S&P 500 is in a correction, down 12.4% from the January record.
US stocks started the year on a downbeat, hit a low for the year on March 14th. Within a few days, stocks rallied back to just down just 3.5% on the YTD. In April, however economic and political news went from bad to worse. As of April 27th, US stocks are just a hair above the low the year.
There’s an odd disconnect between US stock market performance (bearish) with US economic performance (best in years.)
This Sunday, May 1st from 6-6:30 EST David Edwards and Buff Parham addressed these questions:
Are we seeing any clear indicators that we're heading into a bear market? Are we approaching a recession?
Inflation seems to be more persistent than many of us may have assumed. When can we expect some sort of leveling off of the prices of gasoline, groceries, real estate, etc.?
The war in Ukraine is showing the Russian forces to be weak and in disarray...to the point that the Ukrainians are actually winning this war. Does that trend make Putin more likely to deploy tactical nukes, and is there a chance that he is dethroned by his own people?
The Fed's posture on raising interest rates still looks pretty aggressive. Are more rate hikes of 50 basis points or better likely? Or does the downturn in the equities markets temper the Fed's approach?
Based on all that we're seeing right now, what's the best course of action for investors?
David Edwards is president and wealth advisor with Heron Wealth, a $500 million registered investment advisor based in New York City working with 225 client families across the U.S. and around the world. Dustin Lowman contributed additional research for this column.