The Recession Question: Raising the Odds to 40%

Check out the accompanying pdf and chart collection. Executive Summary: Might the only recession we have to fear be one triggered by recession fear itself? It’s possible that we could talk ourselves into one. So while we still expect the economy to grow through the end of next year, we are raising the odds we assign to a recession scenario from 30% to 40%. That lowers our stock-market sights for this year and next. … We have new estimates for S&P 500 revenues, earnings, profit margins, P/Es, and price targets, which we still see at a new high late next year. … Also, we explain what has caused recessions in the past and why we don’t see those dynamics developing now. We’re far from alone in our optimism: Analysts keep raising their earnings estimates, and insider buying has been on fire.