The risks of a recession will lead to a drop in US markets by 20%, even if the recession itself does not occur. This forecast was voiced by the financial company Morgan Stanley.
The company’s chief securities analyst, Mike Wilson, believes that the risk of a stall in economic development will cause US stock markets to collapse another 20% from the current state. In his opinion, this can happen even if a recession is avoided – even a slowdown in the growth of the American economy will lead to a fall.
At the moment, Morgan Stanley’s forecast assumes a recession risk of 35 percent. But Wilson himself does not agree with the official opinion of the company – he believes that the likelihood of stopping economic development is much greater.
Since the beginning of 2022, key US indices have already lost more than 20%. According to Mike Wilson, even if good management will keep the US economy from falling into recession, the stock market will not start to rise soon. First, it will fall by another 10% due to excessive inflation, which breaks records more than forty years ago.
To complete the bearish trend in the market, the situation must be resolved by any of the possible options. Either a recession will come, or its probability will be completely eliminated – in both cases there will be a change in the market, according to Morgan Stanley. A “bear” market becomes when stock markets lose more than 20% of their peak values, and since the beginning of the year, key US indices have already lost about 22%. Analysts from Goldman Sachs join the company’s forecast. They had previously stated that the chance of a recession was about 30%.