Stock market crash: Why coronavirus might sink S&P 500 to its 2009 low

• Societe Generale’s Albert Edwards was amongst a number of Federal Reserve critics who alerted that ultra-loose financial policy left financiers more exposed to a recession.
• A bearish market has now reached breakneck speed– and Edwards sees a path for the stock market to go back to its 2009 lows.
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Count Societe Generale’s Albert Edwards amongst that group.

Now that stocks have plunged into a bear market at the fastest rate ever, he is resurfacing this view– not to take credit for visualizing the coronavirus crisis, however to decode what just occurred in markets and what might follow.

In a current note, he restated his view that the Fed’s actions after the monetary crisis sustained possession bubbles that made financiers more vulnerable in a recession.

” Many of us think that main bank actions over the last years have made the existing already bad scenario much worse than it otherwise would have been,” he stated in a current note.

Moving forward, Edwards visualizes the coronavirus crash ushering in the monetary “Ice Age” he has anticipated for a long time.

Edwards also predicted that the policy reaction to an Ice Age would be so-called helicopter money from all sides.

He continued: “Not just in terms of when the Ice Age ends, however whether the equity market collapse will be as deep as we formerly anticipated i.e. testing the March 2009 low of 666 for the S&P.

A decline in the S&P 500 to the March 2009 low would represent a roughly 72%drop from Friday’s opening level.

The primary motorist of such a decrease would be dried-up business revenues, Edwards stated.

” If greater US business take advantage of has increased the probability of a collapse in profits, even in a mild economic crisis, it beggars the question of what occurs now!” Edwards said.

He concluded: “Forward EPS in the present slump could definitely fall more than the c.40%it crashed in the 2008 crisis. The depth of the recession might be extremely deep indeed, in spite of the aggressive measures being taken.”

%%.

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