The second quarter wraps on Thursday as inflation is at a 40 year high. Stocks are about to turn in the worst first half in fifty years.
The S&P 500, the broadest measure of stocks, is down nearly 18% this year, the worst since 1970, according to Dow Jones Market Data Group. That makes 2022 the fifth-worst half performance on record.
There is a chance that a recession is coming to an end. Stocks are falling.
John Lonski, president of Thru the Cycle, said that there is a very real risk of a recession, and it is perhaps inevitable that we will have an economic downturn before 2024.
The Federal Reserve, which hiked interest rates by 0.75 basis points this month, hasn't been able to contain inflation, as critics, including former U.S. Treasury Secretary Larry Summers, continue to predict a future recession.
The CME's Fed Watch Tool shows that the U.S. Central Bank is on pace to hike rates again in July by another 0.75 basis points.
Even so, in an exclusive interview, he says that a recession may come in the form of a slowdown as inflation comes down and that's not the most likely outcome.
I think we're going to be a welcome relief for people who are watching their disposable income erode because of inflation, which is a sign that we're doing that with some slowing in GDP, some slowing in the labor market.
On Wednesday, investors will get the final reading on 1Q GDP, which fell 1.4% in the first estimate in April. Economists believe that the updated figure will contract by 1.5%. There would be a recession if there were two back-to-back quarters of negative growth.
Technology stocks have been punished by inflation and recession fears, with the Nasdaq Composite 26% slide tracking as the worst first half of the year.
According to Jefferies, mutual fund managers of large-cap growth funds are underweight by 9.1%, the largest on record based on the firm's review of second quarter Securities and Exchange filings, as reported by Seeking Alpha.
The Dow Jones Industrial Average is down 13.5%, the worst first half since 2008.