After a broad bloodbath that came with April caused numerous experts, investors, and traders to speculate over how big the correction could be and even whether it would lead to a recession, the later parts of the month somewhat lessened the fears.
JPMorgan (NYSE: JPM), in particular, came under criticism in some corners of the internet as it seemingly opted for a ‘right, no matter what’ approach, given it nearly simultaneously predicted that the correction is not yet over and that it has ended by late April.
One expert who has certainly proven more decisive in his estimates is the veteran strategist Paul Dietrich.
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Diethrich says it’s safer to sell
According to a late April warning issued by Dietrich, the S&P 500 is likely to collapse another 44% to as low as 2,800 points – a drop not seen since the height of the Covid-19 pandemic – and that, despite the fears seemingly abating, the U.S. economy is likely to enter at least a mild recession before 2024 is out.
Following from this, the strategist – known for generally reliably moving investments into safer assets like gold and bonds prior to previous calamities, chiefly the Dot-com bust and the 2008 crash – the safer option is to sell stocks.
Dietrich also explained that some of the main reasons for why the recession has been delayed – a notion shared by Mike McGlone, a senior commodity analyst at Bloomberg – are consumer debt accumulation, a tight labor market, and significant government spending.
Stock market bulls and bears
At the time of publication, the U.S. stock market finds itself in a highly uncertain situation. On the one hand, it has shown remarkable resilience, and, despite recessionary predictions running high for well over a year, it has, in fact, reached new all-time highs (ATH) in the first quarter of 2024.
On the other hand, there has been no shortage of worrying signs ranging from reheating inflation across near-unprecedented centralization to the apparently anomalous pairing of benchmark indices hitting record levels despite decade-high interest rates.
Some experts, such as Bank of America (NYSE: BAC) analysts, forecast a significant surge above 6,000 points by late 2025. Others, such as ‘The Big Short’ investor Steve Eisman, are similarly bullish, though fearful the FED might spoil the party by prematurely lowering interest rates.
Still, there have been more voices warning of a collapse and a recession. Perhaps the most cynical forecast was issued by a money manager, former FX trader, and Substack author, David Brady, who believes a major recession will be postponed to 2025 largely due to a FED intervention prior to the November elections.
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