CITI: A ‘full-on global bear market’ is coming — here’s where to put your money until it arrives

Bear destroys campsite

A “full-on bear market” could be coming within months, a team from Citi wrote this week.
The bank says markets are in the third of four phases, with the fourth phase bringing a bear market and a possible recession.
Money is still out there to be made, the analysts emphasize, placing recommendations on equities in the US, Korea, Taiwan, Russia, and Brazil.

Markets may be only a few months from entering a “full-on bear market” if historical precedents are recreated, a note released by analysts at Citi this week suggests. That doesn’t mean there’s no money left to be made, however.

Writing in the bank’s quarterly Global Equity update, a team led by the equity strategist Robert Buckland breaks down global market activity into four “phases” — arguing that we are in the third phase but that the fourth phase is on its way. That phase, the team says, is characterized by “a full-on global bear market, usually associated with a US recession.”

They add: “Stock market bubbles burst. Dips should be sold not bought. More defensive and contrarian strategies deliver.”

We’re not there yet, they make clear, but given that phase three lasted only four months during the most recent market cycle, it may not be far off — especially given that by Citi’s estimations the third phase of the cycle started in February. The analysts noted, however, that it lasted 16 months in the late 1980s and 32 months in the late 1990s.

Phase three, Citi says, comes after the peak of the market and is analogous with the period usually known as the “late cycle,” which usually “favours growth and momentum trades and has produced bubbles in the past,” Citi says. Phase four is when things start to go downhill, with the markets and generally the economy entering a downturn. This often includes …read more

Source:: Business Insider


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