A pedestrian passes in front of a statue of a bull in the Wall Street area of New York.
Doug’s office AFP | Getty Images
Expect a significant pullback in the next three months, as macroeconomic growth measures will peak this summer, according to Deutsche Bank’s chief US equity strategist.
Binky Chadha warned customers in a note published on Monday that it predicts a “significant consolidation” in the stock markets in the range of 6% to 10% as economic growth slows.
He and Deutsche Bank measure cyclical macroeconomic growth with the Institute of Supply Management’s production index.
The rise in ISM “usually peaks around a year (10-11 months) after the recession, even when we seem to be,” Chadha wrote. Historically, “The S&P 500 sold around peak growth with a median of -8.4%, but even the episodes that saw ISM flattened rather than fall recorded a median sale of – 5.9% ”.