As stocks continue to rise, several major financial institutions are now predicting a significant downturn in global markets. The S&P 500 is up more than 10% since its low last October. In Europe, the STOXX 600 has increased by more than 15% over the same period. However, according to some investment banks, those gains are now at risk as they fear the late impact of the monetary tightening could hit earnings and trigger a drop in interest rates. profit this year. .STOXX 1Y line Here are five of the biggest calls made to date: Bank of America: STOXX 600 down 20% in Q2 Wall Street bank believes the current strength in the stock market is zero sustainable and there could be a bear market in the second quarter of this year. We expect euro area and US growth to weaken to recession levels due to strict monetary tightening. Stocks are far from pricing in this scenario, helped by recent strength in hard data as companies are clearing their backlogs. If growth weakens, in line with our projections, as the amount of hard data in excess of new orders fades and underlying demand continues to weaken in response to the monetary tightening, then this would match a roughly 20% drop on the Stoxx 600 to 365. – Jan 20 GMO, S&P 500 down 20% to 3,200 in December. GMO President, Jeremy Grantham, who predicted a bear market last year, said the stock price is now supported by the “positive influence” of the so-called bicycle president. However, investors notably expect the S&P 500 to drop to 3,200 “and stay below this level at least this year or next.” The overconfidence bubble has burst behind us, and stocks are cheaper now. But since the list of important negatives is so long, I believe economic and financial problems are likely to continue. I believe they can easily become unexpectedly cruel. As a result, I believe the market continues to decline by at least a significant percentage, although not nearly as certain as it was a year ago, but more likely than not. – Jan 24 UBS: STOXX 600 drops 8% to 410 in December. Swiss bank also sees possibility of 8% drop to 410 (SXXP) due to falling earnings/profit expectations. We think the market is pricing in significantly lower downside risks. With global growth yields and risks expected to remain high for most of this year, we do not expect physical values to recover beyond what we have seen in the past. this year. – Jan. 11 JP Morgan: STOXX 600 up 3% to 465 in December. The US investment bank has a more mixed outlook. JPMorgan strategists say the current market rally will likely start to fade in the first quarter of 2021 as the catalysts that have pushed up stock prices since October – bond yields peaking, inflation and the US dollar – have all entered the market. JPMorgan believes the market will be flat by the end of the year. We believe the current market rally will start to fade as we move through Q1. The stock market is behaving like we’re in the early recovery phase of the cycle, but the Fed isn’t even finished raising rates yet. While January still brings favorable seasons and the current investor positioning is not too heavy, both are supportive of the stock for the time being, we believe one should take advantage of the potential gains. in the coming weeks to reduce the risk. – Jan 23 Barclays: STOXX 600 rose 6% to 475 in December. UK-based investment bank Barclays is bullish on European stock indexes. It expects the STOXX Europe 600 to end the year 6% higher than current levels. It points to data showing that hedge funds are reducing their net short positions in equities, which helps remove downside pressure, to underpin its view. Short-term interest rates halved from Q4 highs for EU stocks, but still up in US Macro [hedge funds] have become outright buy stocks and their exposure is close to 12m high, but still below average. Short-term funds have also reduced their short positions, but their net exposure has also remained low. Purchases of equity ETFs by US investors in Europe have also increased, but the overall positioning of the region remains much more cautious than the positive consensus sentiment on the region suggests. – January 25th