Market Watch: 'Bearmageddon' for Stocks Appears to Be Upon Us, Strategist Says

March 16, 2020

Article by Tomi Kilgore in The Wall Street Market Watch

The stock market’s worst-case “Bearmageddon” scenario appears to have occurred, said Mike O’Rourke, chief market strategist at financial brokerage JonesTrading.

He has described Bearmageddon as when the economy rolls over at a time of “maximum level” of easy monetary policy, while asset values like stocks are still expensive. “That combination of events becomes toxic because investors begin to express concern that the [Federal Reserve’s] monetary policy has become impotent,” O’Rourke wrote in a note to clients.

On Sunday, the Fed cut its target range for the federal-funds rate to zero to 0.25% from 1.00% to 1.25%, and has now cut the rate by 1.5 percentage points since March 3. The move comes in response to the coronavirus outbreak, which has disrupted economic activity.

The Fed also said it implemented a bond-buying program, known as quantitative easing, of at least $700 billion.

“We thought the panic peaked on Thursday, when most of the country started to shut down, but that was eclipsed tonight by the Federal Reserve,” O’Rourke wrote.

To read this article in Market Watch in its entirety, click here.

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