Introduction
The bull market had been running for nearly nine years before 2022, but there are still many doubts about when it will start again. Many believe it will be not until 2024. I find it hard to believe that the bull market is over, and I believe that we’ll see sooner than many predict.
Why the bull market could come back sooner
One reason the bull market may come back sooner, is that despite inflation and macro-economic challenges, the U.S. economy is in good shape. It’s been growing at above its long-term trend rate, which means that if you compare where we are now, it’s been growing at above its long-term trend rate, which means that if you compare where we are now with where we would be if we’d just continued on our existing trajectory, we are in a far superior situation.
The unemployment rate is low as people are securing jobs post covid-19. While there has been some pullback owing to economic tightening, productivity growth has picked up after slowing down during the pandemic. With quantiative easing, public spending remains high in0spite of increasing interest rates, house prices have continued to increase even after their downward spiral during the 2008 financial crisis; consumer spending has been strong despite concerns about wars, food security and trade wars
Even with Covid-19 the US economy has been in the midst of its longest period of expansion
A bull market is a sustained period of growth and prosperity, usually accompanied by rising stock prices. The term bull refers to the way a herd of cattle would move together with their heads down and tails up as they charge forward.
In its most basic definition, a bull market is when stock prices rise 20% or more over 12 months. For example, if you invest $10,000 in Apple Inc (AAPL) at the beginning of 2020 and sell your shares at the end of 2021 for $12,000 then you have made a 20% profit on your investment – an example of a bull market.
Even though there’s no set number of days that constitute a bull run, generally speaking it can be anywhere between 4 – 7 years before things slow down again, so long as there aren’t any major economic shocks during this period that could potentially derail recovery efforts – such as Britain leaving the EU, or the war in Ukraine.
Impact of recession
By convention, economists define a recession as two consecutive quarters of negative growth
You may have heard the word recession thrown around a lot recently, and you may be wondering what it means. If this sounds like a technical term, that’s because it is. Recessions are not bad things in themselves — they’re just periods where economic growth slows down for reasons that can include instability in the market or general economic uncertainty.
The odds that the US will slip into a deeper recession this year are still low.
In the end, all you can do is keep an eye on the situation and do your best to stay aware of what’s going on. It’s a good idea to read up on economic indicators like this, which will help you know when it’s time to start preparing for a recession or bear market, which typically describes a market in which prices fall 20% or more over a set period, usually 12 months. The antithesis to a bull market.
If you’re looking for a stock market positive correction, then the most important question to ask is how much regrowth in the build back better economy can occur with sufficient momentum. After all, the last time we had a recession was in *2008 — and that was more than 14 years ago.
Remaining robust
It’s worth noting that while there are some worrying signs on Wall Street (including recent weakness in tech stocks), the US economy remains resilient. The Federal Reserve has also moved to tighten monetary policy by raising interest rates twice this year, but it’s unclear whether or not they’ll be able to continue with these hikes given their tight labour market outlook.
The latest consensus forecast from a panel of economists and strategists polled by the FT shows that 73% expect above-trend growth in 2019, with a median forecast of 2.5%, above last year’s 2.3% pace.
The market expects the S&P 500 Index to rise about 6% over the next 12 months, according to the CME Group’s FedWatch tool tracking futures contracts in New York.
That assessment is based on an assumption that the Fed will pause after hiking rates twice this year, as it continues to guide markets towards a more “neutral” level for rates.
If there’s one thing that can derail this bull market, it’s an overzealous Fed. The Federal Reserve has been raising rates too quickly, trying to normalize rates, and control inflation and the economy. The markets hate it because they can’t predict what will happen next with interest rates. So the lesson here is to watch the watchers, too much state interference could ruin a good thing.
Conclusion
Can the bull market come back this year? It depends on whether or not you think the Fed will get too aggressive to slow inflation and raise interest rates excessively. If we do further uncertainty across the world growth slow down, there’s always a chance that the market could crash further, but if optimism comes back in the market, despite the geopolitical situation, the market could rally to new heights towards the end of the year