Are We Are In a Bear Market Stock Rally?

Dear Reader,

The Standard and Poor's 500 index is down only about 10% year to date as of today. Earlier the fall was much greater.

Many people are saying we are witnessing a bear market rally. I agree. We are in a classic bear market rally situation. Company earnings and their stock prices can not remain unanchored from the economy for long. I expect the GDP of USA, European Union and China to shrink by 7%, 10% and 6% in 2020 because of the coronavirus disease COVID-19 pandemic lockdown of the economy.

Sooner or later, banks will encounter difficulties through increase of non-performing loans, which will exacerbate the economic  crisis and turn into financial turmoil. Energy companies are hurt horrendously by the falling price of oil and energy companies are one of the main clients for bank loans. Also all universal banks globally are heavily exposed to consumers and small and medium enterprises. Many restaurants, hotels and cafes are small and medium businesses. These small and medium enterprises have bared the full weight of the economic lockdown. Many people are out of work and soon there will be even more loan delinquencies.

We are in a kind of perfect storm. The only two things that are holding the global economy together are the expansive fiscal and monetary policies driven by political cycles in the respective countries. However, something is bound to give. I forecast a long, protracted W-shaped economic recovery. Stock markets will oscillate around lows and I forecast leading stock market indices in USA, Europe and Asia will be significantly lower two years form now.

So, yes.  I am of the opinion we are definitely experiencing a global bear market stock market rally, which will soon lapse into a fall of stock prices again.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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