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Expert: we’re now one pullback away from a true market bottom

on Nov 18, 2022
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  • Liz Young says this bear market rally will soon come to an end.
  • She expects the next market pullback to be the last one.
  • S&P 500 index is currently up 10% versus its year-to-date low.

It’s only a matter of time before this bear market rally much like the previous ones this year comes to an end, says Liz Young. She’s the Head of Investment Strategy at SoFi.

Young brings good news as well though

Her dovish view is predicated chiefly on “valuation”. At over 17 times forward, the S&P 500 index is still expensive when compared to its average over the past five, ten, and fifteen years – and that doesn’t sit well with Young.

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On the plus side, though, the impending pullback, she added, will likely be the last one.

The good news is, if we do have another market pullback, I think it’s the last one because we’ve now seen a lot of economic data start to crack and the market typically falls before the economy really bottoms.

At writing, the benchmark index is up more than 10% versus its year-to-date low.

Young doesn’t want the Fed to pivot just yet

Young is not in the camp that still sees a possibility of “no” recession in 2023. In fact, she dubs it a bigger, more long-term threat if the Fed pivots too early.

Nonetheless, she does agree that it doesn’t necessarily have to be a deep recession. On CNBC’s “Squawk Box”, Young noted:

When you at the signals – yield curve and economic data, those point to the idea that there probably will be a recession. That doesn’t mean it has to be a deep or long one. All it needs to do is reset the business cycle.

Consumer prices, earlier this month, indicated peak inflation as the monthly CPI came in better than expected that Invezz reported here.

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