Recession Roulette

We are starting to see some big earnings cuts across the sell-side. In this report, I examine what’s priced into the market here.

The S&P 500 has dropped -21% from its highs in under 2 months.

We have had a massive positioning unwind, led by historic Hedge Fund de-risking. Total positioning has declined from ATHs at the end of January (+2.6z) to now -2.5z in a little over 2 months.

Many stocks have been exhibiting Bear Market behavior all year, despite the indices peaking in mid-February.

The question now is: “What’s priced in here after a roughly -20% market drop”?