According to CEO Doug Ramsey, CEO Doug Ramsey of Leuthold Group, investors may be facing circumstances contrary to the Goldilocks scenario in terms of moderate conditions.
“What about not too hot and not too cold? both? ‘ Ramsey wrote in a note (his emphasis).
“Job growth and inflation are hot enough for the Fed to deliver on its hawkish promises,” he said. But leading indicators continue to warn us of the cold. The odds are that the porridge settles at the right temperature, with no interstitial degradation, looking longer by the day. “
While the best long-term entry points into the stock market are in bad economies, that’s already happening when problems are priced in, Ramsey said.
“Money is tight and the tape has rolled, but trading valuations are near their pre-COVID highs.”
“At some stage during a bear market, we get to where ‘bad news is good news’,” he added. “But in terms of prices probably at least a few hundred S&P points below current levels.”
The S&P closed at 4,067 on Friday.
“The timing question is more difficult because of the unpredictable lag associated with the Leading Economic Indices.”
BofA says good news for bulls is stocks still holding bonds.