A pedestrian passes in front of a bull statue in the Wall Street area of New York City.
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Expect a significant decline in equities in the next three months, as macroeconomic growth indicators will peak this summer, according to Deutsche Bank’s top US equity strategist.
Binky Chadha warned customers in a note released Monday that he expects “significant consolidation” in equity markets in the range of a 6% to 10% decline as economic growth slows.
He and Deutsche Bank measure cyclical macroeconomic growth with the Institute for Supply Management’s manufacturing index.
ISM growth “usually peaks around a year (10-11 months) after the end of the recession, right at the point it would appear to be,” Chadha wrote. Historically, “the S&P 500 sold around peak growth at an average of -8.4%, but even episodes that saw the ISM flattened rather than fall, produced a median of -5.9% of sales “.