London-based Financial Markets Researcher Predicts Bear Market for Equities Will Continue

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Longview Economics Ltd, a London-based pioneer independent financial markets research house, noted that the markets had not priced accordingly in a recession. The company sees a possibility that the bear market in equities will continue to deepen this year.

According to the prediction of Longview senior market strategist Harry Colvin, the US-led recession is likely to happen in the first half of 2023, way earlier than earlier forecasts that recessions may start showing up by Q4. Colvin argues that “2023 is the pricing of recession and rotation amongst key areas/sectors of the equity market. We’re into chapter two of this bear market, and there is no soft landing coming.”

Colvin and his team point to specific historical trends to support their argument. According to them, the US Equities market has stayed the same since 1929. The S&P 500 has gone through 15 recessions, and equities usually pull through.

Another historical trend that Colvin points out is that earnings bottom with equities. “Typically, nominal yields move lower in a bear market anyway, but we need equity markets to price in weaker earnings,” Colvin says.

Moreover, Colvin notes that commodities will likely roll over once the economy goes into recession. With the current global economic situation, what is preventing the recession from happening is China’s reopening. According to Hans Lee, content editor for Livewire Markets, one other indicator to determine how close the economy is to recession is looking into the housing sector.

Other economists and strategists, according to The Guardian’s financial news journalist Graeme Wearden, “The first half of the new year is likely to be choppy after global markets suffered their biggest fall since the 2008 financial crisis last year. But the US S&P 500 is still expected to end 2023 a little higher than it began the year. The average target of 22 strategists polled by Bloomberg has the S&P 500 ending 2023 at 4,078 points – about 6% higher than it ended 2022.”

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