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This market risk could prevent another monster surge and wipe out 2019′s gains

April 11
09:52 2019

Leuthold Group’s Jim Paulsen is tempering his bull case for stocks.

Even though he believes the S&P 500 could rally at least another 10%, there’s a catch.

Paulsen won’t rule out a recession.

“Between now and the summer, we’re going to decide whether the economy is going to hold together or whether we’re falling off a cliff,” the firm’s chief investment strategist said Wednesday on CNBC’s “Trading Nation. ” If we’re not falling off a cliff, it could go quite a bit higher in the second half of the year.”

According to Paulsen, the most likely scenario is the economic and earnings slowdown will elongate the recovery and bull market. He finds full-on policy support from the Federal Reserve and White House favorable for additional stock market gains.

But he’s not willing to bet all his chips on it.

“Recession and bear market fears would return very, very quickly and very harshly,” he said. “We have a good deal of fear. Fear of bear markets. Fear of recessions. Fear of negative yields. Fear of reverting curves. … We’re climbing a wall of worry.”

Yet, the S&P 500 is up almost 23% from its December low and more than 15% this year. The index is just 2% from its all-time high.

Continue Reading at CNBC

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