Economic security

Guggenheim says next recession will be less severe — but the ensuing stock market fall will be brutal

Asset-management firm Guggenheim has some good news and some really bad news for Wall Street: The coming recession will be milder than past recessions — that’s the good news. The bad news is that the stock market is still likely to suffer a savage beatdown as an economic downturn sets in as early as 2020.

They said a lack of pent-up problems in the housing market and a well-capitalized banking system mean the economy is more resilient. That should be welcome news for risk assets, in the wake of March’s inversion of the yield curve — an apparent harbinger of coming recessions, closely watched by Wall Street types and economists.

However, despite a relatively soft landing for the economy, equity benchmarks are likely to see a severe slump, partly due to lofty valuations and a lack of available fiscal and monetary policy tools, analysts at Guggenheim Investments led by Scott Minerd wrote in a Tuesday research note.