At the end of 2021, a wave of blockbusters began. Then in January 2022, market sentiment deteriorated and the rally lost momentum. Sound familiar?
Top economist David Rosenberg sounded the alarm in a report released Monday by Rosenberg Research, saying the market is in a frustrating moment.
Things look very similar to what we're heading into 2022, with sentiment and technical indicators at extremes, comparable to what we saw in December 2021 (and with worse fundamentals). ”
The S&P 500 peaked in early January 2022 and then fell sharply to end the year at 20%**, its worst year since 2008.
In a monthly guide for active investors prepared by Rosenborg Research, analysts at the company said that the U.S. is currently showing the greatest bear market sentiment.
"The risk-reward profile leaves much to be desired, and our model suggests that exposure should be reduced or at least properly hedged at this time," they wrote. ”
According to the report, financials can cushion the blow of a sharp decline, as they typically perform well during periods of Fed pause in rate hikes and disinflation.
Large banks have a lot of capital to rely on, and insurers have steady earnings growth and better valuations.
After financials, energy, communication services and utilities are tied for second place.
Rosenberg has been waving the big flag of recession, and recently he said that those who deny the recession are repeating the mistakes of the dotcom and the housing bubble.
A few weeks ago, the former Merrill Lynch economist also warned that it would end in failure and enter a "bad January".