Where Is the Stock Market Bottom?

Dear Reader,


The major US stock market indices are off circa 15% from their recent historic highs due to various reasons, but the dominant factor seems to be the coronavirus angst and its effect on the economy.

How low will the US and global stock markets go before they start climbing again? I forecast that the bottom of the US and European major stock market indices should be around 20% below their recent highs. Or with other words the US and European stock markets could well dip into a bear market before they start recovering.

Why do I think things are not catastrophic and a 20% fall of the major indices will help clear the market? The main reason is that we are nearing April when the end of the influenza season comes. What is more, the coronavirus statistics are not terribly frightening. People seem to be overreacting.

Global central banks lead by the Federal Reserve will get involved and support the market. Governments will further support the economy through fiscal stimulus. The global economy will dip into a recession, but will recover with a U-shaped recovery. The big fall in global GDP will start  somewhere in 2022. In the last 10 year we witnessed the longest economic expansion in history. That said, the economic expansion was shallow. The next recession will be of the same ilk. GDP will be falling by -0.5% to -1.0% for several years.

That said, the coronavirus recession will be followed by a quick recovery. The stocks that are going to benefit most from that recovery are gold miners, oil production companies and technology stocks. However, with the recession that is going to follow all sectors will tank and almost 100% of all listed stocks in the US will fall, because the recession, although slow, will be deep. Deeper than the 2009 Great Recession.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich