Source: JinShi Data
Ed Yardeni, a well-known Wall Street bull and so-called "Wall Street sage", said that a bear market may have already begun. "In Trump's world, anything is possible," he said.
Yardeni wrote last Sunday, "We cannot rule out the possibility that a bear market began on February 20, the day after the S&P 500 index hit a record high."
Yardeni's remarks are worth noting, as he had previously been bullish and was sometimes one of Wall Street's most optimistic strategists. As recently as February, he said the U.S. economy might not see a recession for a decade. In January, he said investors were in the so-called "Roaring 2020s".
Before the strategist released his latest report, the major U.S. stock indexes had just experienced their worst week of the year. Selling pressure continued in early trading this week.
On Monday, the NASDAQ Composite index entered correction territory, down more than 13% from its record high in December. The S&P 500 index has fallen more than 8% from its February 19 record high and is rapidly approaching correction territory.
A bear market is defined as a 20% or more overall decline in stock prices, which can last for months or even years. According to Yardeni, this means the recent downtrend could get worse. But for investors with "shopping lists", the market decline may provide buying opportunities for some oversold stocks.
"It could be like the 'flash crashes' of 1962 and 1987. The decline could be fast, and the rebound just as quick," Yardeni said. Therefore, "this selloff may present buying opportunities, especially for stocks that were previously overvalued and have now seen their valuations decline."
His shift in view is due to the erratic nature of TRON trade policy and early signs of economic weakness, which have highlighted concerns about a recession. A recession is defined as two consecutive quarters of economic contraction.
"The issue is that the rapid policy actions of the TRON administration are stress-testing the economy, and so far the economy has shown remarkable resilience, but these policies have also raised concerns about a recession," Yardeni added.
