While we continue to believe much of the developed world is currently in a mild recession there is reason to believe that near-term deflationary forces may have been reduced, at least in the short-term. Nonetheless, the preponderance of other risks and current valuations do not make this a time to take increased risk.
Stocks Missed a Bear Market in 3 of the Last 15 Recessions but in Each Instance Valuations Were Much Lower
ECRI published a report yesterday reaffirming their view that a new recession started mid-year 2012. In this report they show that about 20% of the time (3 of the last 15 recessions) the stock market either rose or did not fall 20% (the key “bear” market threshold) from onset of…