(New York)

The market seems like it is hurdling towards the same conclusion it experienced last year—a big fourth quarter reversal. This time though, it won’t come because of worries over rate hikes, but fears for the economy itself. Stocks have been on an extraordinary run this year with the S&P 500 up over 20% and the Nasdaq up over 25%, but it all looks likely to reverse. P/E ratios have jumped from an average of 13x to over 17x, all at the same time as the global and US economy is looking more vulnerable.

FINSUM: We think a market reversal will likely come in step with economic signals. If a rate cut actually works to stimulate the economy, then it seems much less likely there will be a correction/bear market like last year.