Wall Street may be tearing a page out of the post-World War II era.
According to Lori Calvasina of RBC Capital Markets, stocks may be ignoring all signs of decline.
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“If you go all the way back to 1945, that was the recession coming out of World War II, the stock market just marched through,” said the firm’s head of U.S. equity strategy to CNBC’s “Fast Money” on Monday. “This is the only recession where it hasn’t been ignored.”
In a research note out this week, Calvasina looked at the performance of the S&P 500 during recessions dating back to 1937. She found that the 1945 recession was the only one without a market pullback. .
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She listed the similarities between government war funding in 1945 to massive Covid relief in 2020 and the Fed’s rate hikes as a few examples.
“I found interesting words that were similar. It was described as a technical decline, just driven by the fact that the wartime economy was closing, and we were moving to a peacetime economy,” said Calvasina. “[This] idea of a recession that we were all talking about last year, you had it back then.”
However, she also admitted that there are differences between the two periods and noted that she does not believe the bull case.
“I really think we priced in a recession back at the October lows, but I think people are tired of hearing that,” Calvasina said.
she is S&P 500 year-end price target is 4,100. She revised her S&P EPS forecast last week to $200 from $199. The S&P closed at 4,135.32 today and is up more than eight percent year to date.
