DAVID BIANCO: We're About To Experience Something That's Rare Outside Of Recessions

David BiancoDavid Bianco

Photo: CNBC

David Bianco, the Chief U.S. Equity Strategist at Deutsche Bank, has been getting increasingly bearish in recent months. Typically bullish, Bianco took on an unusually cautious tone in a June 15 note.  Then, in a July 13 note, he warned that the next 5% move in stock would be “more likely down than up.

Last week, he turned that 5% call to a range.  “We fear the S&P 500 is likely to sell-off 5-10%,” wrote Bianco in his July 30 note.

In his most bearish note since starting at Deutsche Bank, Bianco points to a deteriorating measure that signals recession:

June and July’s sub 50 US Mfg. ISM and continued commodity price and FX EPS headwinds, make it very likely that 3Q12 EPS will be down sequentially and vs. last year, which is rare outside of recessions. Given the continued weakness in global PMIs this week and still no certainty in decisive policy actions, we fear that investors are unlikely to calmly wait for 2H macro improvement. We think the S&P is likely to sell-off 5-10% in the near-term from today’s price.

Still, Bianco’s year-end target remains 1,475 and his 12-month target continues to be 1,500.

SEE ALSO: David Bianco’s 20 Guiding Principles For Investing In The Stock Market >

 

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.