Concern grows in investors due to signs of gloomy stocks that continue to accumulate as Wall Street considers the likelihood of a recession. And is that after nine turbulent weeks plus correction in US stocks, cause questions. Thus, for analysts, the question arises: What does the market say about the economy?
It should be noted that from the rise of defensive industries to the unforeseen madness by companies that resist volatility, stocks are proceeding in a way that has predicted the slowdown of the increase in the past. Meanwhile, there are those who see the sale as healthy after 10 years of profit. But with a burning of the trade war and the Federal Reserve set out to raise interest rates again. Therefore, the number of researchers who are willing to mention the possibility is increasing.
Data to consider
Based on the United States recession probability forecast index by Bloomberg, the chances of the US Fall into a recession next year are 15 percent. Being that the economy is possibly losing speed next year and in 2020. For its part, economists have not always done an ideal job predicting contractions.
In fact, during 2014 a study was carried out by Prakash Loungani of the Monetary Fund. In that study, it was found that none of the 49 recessions suffered worldwide in 2009 had been predicted by the consensus of economists the previous year.
In the same way, investors are acting worried. They are becoming defensive sectors that work best when the economy is in trouble. Likewise, some of them seek refuge from market turbulence in stocks with moderate price swings compared to their riskier siblings.
This week a note was appreciated by JPMorgan strategists led by Dubravko Lakos-Bujas. Where it has been said that the performance gap between defensive stocks and cyclical stocks suggests that investors are starting to trade in a scenario similar to a recession.
Source: Elena Popina and Vildana Hajric | Bloomberg
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