Financial safety

Bear market for stocks already underway, recession coming, says Crescat Capital

Investors are waking up to a rumble on the geopolitical front, as tensions heat up between two big nuclear powers, India and Pakistan.

See below for more details, and watch for Southern Asia unease to be used as an excuse for selling, something that has already been seen across global equities. Earnings disappointment and ever-present worries about the U.S. economy also get some credit for rattling investors Wednesday.

On that last point, Fed Chairman Jerome Powell heads back to Capitol Hill ahead of more data, as big banks struggle with the debate over whether the U.S. is headed for recession. J.P. Morgan’s CEO James Dimon reportedly told clients Tuesday they are bracing for a recession, just in case.

Doubts about the U.S. and global economy color our call of the day, from Octavio ‘Tavi’ Costa, Crescat Capital global macro analyst, who sees a recession coming, and thinks investors are blind to the fact the bear market for stocks has already started.

“In our view, September of 2018 marked the peak of the U.S. economic cycle. We are now seeing a typical bear market rally, and the next downward leg is likely to be just as abrupt as the first one,” Costa told MarketWatch in an interview. “It’s hard to pinpoint when exactly, but my best guess is between now and April.”