Expectations for the S&P year end target haven’t come down enough to adapt to the current situation. Either big banks think markets will rebound in the second half (unlikely) or they’ll cut their expectations agressively as we go into year end. The futures market is also discounting (90ish% probability) another 75 bps #ratehike for the #FOMC July meeting, which makes the potential rebound even more unlinkely. The equity market is oversold, with the vast majority of stocks below their 200 day moving average, so, a rebound, what is called a bear market rally, is likely, but it’s difficult to see that becoming a wave of positive thinking, pushing the markets to prior high levels. It seems that capitulation is a more likely scenario down the road.
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Source: Bloomberg
