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The stock market is looking “eerily similar” to 2022, top economist David Rosenberg said.
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The S&P 500 peaked in early January 2022, then tanked and finished the year down 20%.
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Analysts at Rosenberg Research said US stocks currently signal maximum bearishness.
In late 2021, stocks took off on a blockbuster rally. Then in January 2022, sentiment soured, and the rally ran out of steam. Sound familiar?
Top economist David Rosenberg sounded the alarm in a note published by Rosenberg Research on Monday, saying that markets are having a déjà vu moment.
“The setup for 2024 is looking eerily similar to how we entered 2022, with positioning, sentiment, and technicals all at extreme readings – matching what we saw in December 2021 (and with worse fundamentals to boot).”
The S&P 500 peaked in early January 2022, then tanked and finished the year down 20%, its worst year since 2008.
In Rosenberg’s monthly guidebook for active investors, the firm’s analysts said US stocks currently signal maximum bearishness.
“The risk/reward profile leaves much to be desired, with our models pointing to lightening exposure at this time or, at the very least, having proper hedges in place,” they wrote.
One buffer against a major stock sell-off would be financials, because the sector usually performs well during a Fed pause and periods of disinflation, according to the note.
Larger banks have a lot of capital to lean on, and insurance companies have stable earnings growth and better valuations.
After financials, energy, communication services, and utilities sectors are all tied for second place, it added.
Rosenberg has been waving the recession flag and recently said that those denying a downturn are repeating the mistakes from the dot-com and housing bubbles.
A couple weeks ago, the ex-Merrill Lynch economist also warned the stock market rally would fizzle into a “nasty January.”
Read the original article on Business Insider
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