Tags: Jakobsen | stocks | 30% | correction

Saxo Bank's Jakobsen: Stocks Poised for 30 Percent Drop

By    |   Thursday, 03 April 2014 02:29 PM

The S&P 500 Index, which reached a record high Thursday, is approaching 1,900, a level that could trigger at 30 percent correction, says Steen Jakobsen, chief economist and chief investment officer at Saxo Bank.

The index stood at 1,888.26 around mid-day Thursday. If it hits 1,900, it could tumble to 1,330, he told CNBC.

The S&P 500 hasn't endured a 10 percent correction since October 2011. It plunged 58 percent from October 2007 to March 2009.

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Stocks fall 10 percent once a year on average and plummet 25 to 30 percent every five years, Jakobsen explained. "So statistically we are overdue" for a drop, he said.

"Equities are the only asset class that have not been impacted by this crisis. We had commodities, and then we had fixed income. So for the crisis to play out fully, we need to go into equities. That will happen on lack of earnings, the lack of growth coming into the sector."

Jakobsen sees a "very significant" global slowdown coming soon. Stocks are benefiting from corporate share buybacks, he argued.

Many market participants now express cautious bullishness. "The market still wants to be positive and has this feeling of goodwill, but at times it runs into a little bit of resistance," Robert Pavlik, chief market strategist at Banyan Partners, told Bloomberg.

"Nobody wants to buy at an all-time high, and that’s where we are. People are a little bit more cautious."

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InvestingAnalysis
The S&P 500 Index, which reached a record high Thursday, is approaching 1,900, a level that could trigger at 30 percent correction, says Steen Jakobsen, chief economist and chief investment officer at Saxo Bank.
Jakobsen,stocks,30%,correction
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2014-29-03
Thursday, 03 April 2014 02:29 PM
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