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什么是熊市(Bear Market)?

It's time to 'play defense' with stocks experiencing a classic bear-market rally, Wells Fargo 什么是熊市(Bear Market)? warns

Stocks won't exit the bear market until the Federal Reserve's last interest rate hike, according to Wells Fargo.

Investors need to be cautious despite major indices' recent gains, CIO Darrell Cronk told Bloomberg TV.

"This very much looks like a bear market rally… you've got to play defense," Cronk said.

It's time for investors to get defensive and consider jumping out of stocks, which look caught in the middle of a bear-market rally, according to a Wells Fargo investment chief.

Darrell Cronk told Bloomberg TV he's skeptical about how well equities will perform over the rest of 2022, even though the S&P 500 has climbed more than 15% since hitting a low for the year in June.

"This is the question: Is this a bear market rally or the start of a new bull?" Cronk, CIO for Wells Fargo Wealth and Investment Management, said on Friday. "This to us very much looks like a bear market rally."

"People forget that as bear markets get older, the bear market rallies get larger. This is the largest 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? one we've seen, we've had six S&P 500 rallies during this bear of 7% or 什么是熊市(Bear Market)? greater."

He believes the S&P 500's recent rally isn't sustainable, given the US benchmark has failed since April to break above its 200-day moving average. If stocks rise or fall through this key resistance level, it's seen as a change in long-term direction.

"The fact that we've failed off the 200-day to us still says that you've got to play defense," Cronk said — suggesting they pivot away from stocks, and into less risky and volatile markets such as bonds or cash.

The Wells Fargo CIO said bear markets don't end three things happen: housing market forward indicators hit a bottom, earnings estimates fall significantly or trough, and the Federal Reserve is on the verge of stopping its interest rate hikes.

"You've got to get closer to the Fed being at or within sight of their last interest rate hike," he said. "We think we're still probably at least six months away from that."

"So, 什么是熊市(Bear Market)? bear market rally — play defense here from a risk standpoint," Cronk said.

Markets have gained thanks to some investors' expectations that the Fed will pivot to start cutting interest rates soon. But Wall 什么是熊市(Bear Market)? Street strategists have warned that the US central bank's current hiking cycle won't end 什么是熊市(Bear Market)? until 2023.

Analysts at Goldman Sachs, Bank of America, and HSBC all said last week that the Fed will likely continue to hike until nominal rates are at 4%, around 150 basis points above their current level.

Bloomberg

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Are We Seeing the Failure of a Bear Market Rally or Just a Healthy Pullback?

Stocks are set to gap lower to start the week. It is not a big surprise that the market is 什么是熊市(Bear Market)? finally undergoing corrective action after a fast and furious run, but the billion-dollar question is how far it will go. Is this just a reset that will set the stage for another push higher, or is it the failure of a bear market rally that the pessimists have warned us 什么是熊市(Bear Market)? about?

The good news is we don't need to answer that question today, but we do need to increase our vigilance and be ready in case the selling pressure accelerates. The S&P 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? 500 can pull back to 4,160 or so without doing major technical damage, but such a 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? move would cause some pain and there likely will be some rotational action that is going 什么是熊市(Bear Market)? to be harder on sectors such as growth, biotechnology, small-caps and technology.

The thing that is particularly interesting about the market right now is how quickly the narrative is shifting. During the big run 什么是熊市(Bear Market)? off the June lows, the narrative was that the market had already priced in the worst and that it could handle a hawkish Fed. There was increased optimism that the strong labor market 什么是熊市(Bear Market)? would provide enough strength to withstand a series of rate hikes and avoid a recession. The drop 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? in energy and commodity prices also provided hope that inflation had peaked.

Last week the narrative started to become less positive. The Fed has made it clear that it is not likely to pivot to a more dovish stance very quickly, and there is increased debate over whether the unemployment rate needs to increase in order to effectively deal with inflation.

Some bulls contend that there has never been a bear market bounce of this magnitude that did not produce a bottom. We 什么是熊市(Bear Market)? shall see, but we have never had economic conditions similar to this at this stage of 什么是熊市(Bear Market)? the market cycle. I have little confidence that there is a historical precedent for this market.

As I've been discussing, I have raised quite a bit of cash into the recent strength primarily 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? because many stocks I favor have become technically extended and I am not seeing many good entry points. Even after a few days of weakness, it is still going to take more work 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? for better charts to develop.

This is the time for caution. Don't be in a rush to put valuable capital back to work. If you are going to trade, then keep time 什么是熊市(Bear Market)? frames short and don't forget that we are going to be dealing with negative seasonality for a while.

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A key economic bellwether just fell into a bear market - and it's happened before every recession in the last 30 years

Email Link icon 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? An image of a chain link. It symobilizes a website link url.

Copper

  • Copper has entered a bear market, which may indicate a stronger chance that recession is coming.
  • The metal, which 什么是熊市(Bear Market)? is an economic barometer, fell 24% from its peak in May 2021 on Friday.
  • The risk 什么是熊市(Bear Market)? of a recession is gathering pace as interest rate hikes and inflation choke global growth.

Copper has just tipped into a bear market and it's happened before each recession in the last 30 years, which could indicate another economic downturn may be underway.

It's used in everything from electrics and electronics to construction, meaning it's intertwined with the underlying global economy. The benchmark 什么是熊市(Bear Market)? London Metal Exchange copper price has now fallen 24% from its peak above $10,700 a tonne in May 2021 Friday to trade at $8,255 a ton. A fall of more than 20% 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? from a previous peak is the technical definition of a bear market.

Recessionary fears have picked up speed, fueled by rapidly rising interest rates and red-hot inflation, with some of the world's 什么是熊市(Bear Market)? biggest banks including Goldman Sachs, Morgan Stanley, and Citi increasing their expectations of a recession hitting the 什么是熊市(Bear Market)? US economy, as the cost of food, fuel and housing continue to squeeze the consumer.

Copper 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? is on track for a 19% decline in the three months from March to June, making this its worst quarterly performance since the first quarter of 2020, which witnessed the depths of the 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? coronavirus crisis.

"These moves suggest that the market's sensitivity to recession risks has stepped up," Jane Foley, Rabobank senior FX strategist said.

Nomura, a leading Japanese investment bank, also predicted the US 什么是熊市(Bear Market)? economy would tip into a recession this year.

The Fed lifted the benchmark interest rate three times faster than usual by 0.75 percentage points earlier this month as the US struggles in its war with inflation. It was responding to data from the US Consumer Price Index that showed inflation rose by 8.6% through May driven by a surge in energy prices.

Most recently, 什么是熊市(Bear Market)? Federal Reserve Chair Jerome Powell fanned the flames on the chance of recession saying it is not an intended outcome but is certainly a possibility. At the same time, he declined to rule out a 100 basis point interest rate hike while expressing his "unconditional" commitment to fighting inflation.

Stocks 什么是熊市(Bear Market)? have tumbled into bear-market territory, as have cryptocurrencies, as investors have ditched assets that stand to lose from an environment of higher rates and inflation.

Meanwhile, "Dr Copper" — which earned its nickname 什么是熊市(Bear Market)? from what some believe is its tendency to gauge the health of the economy — is suggesting 什么是熊市(Bear Market)? those fears could become more of a reality given that it's fallen into a bear market in the run-up to each of the last four recessions dating back to 1990, as the chart below shows.

For example, the dotcome bubble burst in the early weeks of 2001, triggering a recession that would last through the remainder of that year. But copper had already peaked in September 2000 and had already lost roughly 20% when the stock market started to tumble and economic 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? growth slowed.

"The market has become concerned about a slowing in global growth, driven by fears 什么是熊市(Bear Market)? surrounding Chinese output and the headwinds to growth in Europe," Rabobank's Foley added.

Bank of America 什么是熊市(Bear Market)? strategists said it was worth noting how copper behaved in the last aggressive rate-hike cycle of 1979/80, which also ended in recession.

"Copper did not decline wile rates were rising, but the metal ultimately came under pressure when the economy contracted. Hence, increased recession risks do matter," they said.