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Signs of a recession are starting to build….
This is according to Briley Wealth’s chief investment strategist Paul Dietrich . The stock market’s 20% rally is one such warning, he said, as the S&P 500 has typically posted outsized gains in the months leading up to a downturn.
That was the case prior to the 2001, 2008, and 2020 recessions, when stocks rallied sharply before the economy began contracting.
There are other “stock market disconnects” that are making the case the economy will soon roll over into a downturn, he added.
In almost every case, the S&P 500 has bottomed out roughly four months before the end of a recession. The index typically hits a high seven months before the start of a recession. During the last four recessions since 1990, the S&P 500 declined an average of 8.8%, according to data from CFRA Research.
As long as markets continue to believe in the soft landing and avoiding a recession, the markets won’t get the jolt they need to drop far. However, if the tide starts to turn, it will do so incredibly quickly.
Anyone for a market sell off?
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