Veteran strategist David Roche cautioned the current volatility might be pointing towards a bearish market, instead of a momentary speed bump in an ongoing bull run.
“What we’re in the process of seeing is not a minor interruption in a bull market but perhaps a turning point towards a bear market,” Roche, president and international strategist at Independent Strategy, informed CNBC’s “Street Signs Asia” on Monday.
He discussed that “all the good factors” that drove economies throughout the pandemic– such as federal government funding of both family and business balance sheets– are set to be “slowly withdrawn.”
Meanwhile, supply side disturbances in labor markets suggests that employee earnings are not going to change the cash that formerly originated from public authorities, the previous international strategist and head of research study at Morgan Stanley included.
“So, because this is so important with what drove financial markets — excess money chasing insufficient assets — I would say we’re about a quarter of the way through the education of the punters,” Roche stated.
“There is practically nobody in the business left except me — which tells you about my age — there’s nobody left who actually remembers what a bear market is really like,” he cautioned. “People really only remember buying on dips, that every time anything went down, pain threshold of central banks was quickly reached and they reverse policy if they were tightening.”
Wild January for stocks
The veteran strategist’s remarks follow a wild January for international markets as financiers faced a variety of problems: from significant reserve banks like the U.S. Federal Reserve possibly tightening up financial policy, to continuous geopolitical stress in between Russia and the West over Ukraine, in addition to concerns over inflation.
In Asia, markets in Japan and mainland China’s Shenzhen remained in correction area or even worse by the end ofJanuary Over in Hong Kong, the standard Hang Seng index beings in bearishness area, with the city’s markets presently closed for the Lunar New Year vacations.
On Wall Street, the S&P 500 and tech-heavy Nasdaq Composite published their worst months because the start of the pandemic. Elsewhere, European stocks likewise saw their worst month because October 2020 in January.
