The Death of a Bull

Global equity markets continued their sell off during the second quarter as economic conditions around the world deteriorated.  An aggressive Federal Reserve raised the Fed Funds rate to pre pandemic levels, causing more drops in bond prices.  With inflation continuing to rise, the Fed seems willing to risk a deep recession to get rising prices under control.  Stocks entered bear market territory during the quarter, with a 20% pullback from their highs.  The yield curve inverted during the quarter, signaling that a recession is likely.  Most economists have stopped talking about whether a recession is likely and are now discussing how bad the recession will be.  In fact, we could very well already be in a recession now, as GDP contracted in the first quarter.  A repeat of this in the second quarter would meet the definition of a recession.  While a recession is not a certainty, it is looking more likely than not that we will see one.

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