The stock market, Mr. Paulsen said, often moves in advance of a recession — and a declining market can help cause a recession — making investment timing extremely difficult now. In this dangerous environment, he said, “right now, I’d be a little careful.”
Mr. Hickey, too, advises caution, because when he enumerates the pros and cons for the market, the positive side is scanty. It includes factors like these:
■ Despite some difficulties, the gross domestic product in the United States rose at a 3.5 percent annual rate in the third quarter.
■ The Conference Board’s Leading Economic Indicators index has been rising, which suggests that a recession is probably not imminent.
■ The yield curve — the difference between long- and short-term interest rates — remains in a bullish zone, although that positive margin has been narrowing and bears close watching.
■ The end of the Federal Reserve’s interest rate tightening cycle may be in sight. Jerome H. Powell, the Fed chairman, said on Wednesday that interest rates were already close to a “neutral” level, which might imply that rates won’t rise much higher.
■ Finally, there is already so much bad news about the stock market that it amounts to good news. According to contrarian logic, Mr. Hickey said, the negatives are baked into stock prices, so the market has room to rise.
That last item may be a stretch. It is an indication, he said, that he is having difficulty being upbeat.
Article source: https://www.nytimes.com/2018/11/30/business/stock-market-dangers-bear.html?partner=rss&emc=rss
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