LPL’s senior market strategist, Ryan Detrick, is betting on the latter. He expects the U.S. economy to rise as much as 2.75 percent in 2019.
“In the end, the largest market corrections take place during recessions. Will we have a recession in 2019? We don’t think so,” Detrick said in a note to clients. “The bottom line is that you can have bear markets without a recession.”
Bear markets that go way past 20 percent tend to be associated with “secular transitions,” things like the excessive valuations of the dot.com bubble. Near-bear markets, however, are more common around technology transitions or one-time disruptions, according to Argus. The one going on now is occurring next to high consumer and small business confidence, solid industrial activity and low interest rate and energy inputs.
The bad kind of bear market lasts an average of 556 days and is much worse than 20 percent, according to Argus’ analysis. The mean peak-to-trough decline during recent bear markets has been around 35 percent. And if stocks can reverse their recent downtrend, the current "bearish duration" would be uncommonly short, at less than 90 days, he said.
This article was provided by Bloomberg News.