The Next Bear Market May Have Just Begun

A 20% S&P 500 decline is now a plausible scenario as elevated oil prices and widening credit spreads are compressing valuations and earnings yields, raising material downside risk to equities. Monitor oil and credit-spread moves (IG/HY) as potential market-wide triggers and consider defensive positioning and hedges given the heightened probability of a sizable correction.

Analysis

A 20% S&P 500 decline is now a plausible scenario as elevated oil prices and widening credit spreads are compressing valuations and earnings yields, raising material downside risk to equities. Monitor oil and credit-spread moves (IG/HY) as potential market-wide triggers and consider defensive positioning and hedges given the heightened probability of a sizable correction.