A pedestrian passes by a bull statue in the Wall Street area of New York.
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Deutsche Bank’s chief US equity strategist predicts that as macroeconomic growth indicators peak this summer, stocks are expected to fall sharply in the next three months.
Binky Chadha warned clients in a report released on Monday that he predicted that as economic growth slows, there will be “significant consolidation”
He and Deutsche Bank used the Manufacturing Index of the Institute of Supply Management to measure cyclical macroeconomic growth.
Chadha writes that ISM’s growth “usually peaks in about a year (10-11 months) after the recession ends, and it seems to us that it will reach this level.” Historically, “The median value of the S&P 500’s sell-off near the peak of economic growth was -8.4%, but even during a period when the ISM stabilized rather than fell, the median value of the sell-off was -5.9%.”