The French bank Societe Generale cited the history of the money market during a century and a half, in building its calculations for the next bottom of the S&P 500 index, as it concluded that the benchmark index still has a 24% drop from its current levels.
Societe Generale expects the market to fall 40% from the S&P 500’s peak in January in the next six months, to reach a bottom of 2,900. The best scenario was for the index to decline by about 34% from its peak to 3150 points, according to “Bloomberg”, and seen by “Al Arabiya.net”.
In a note to clients, the bank indicated that it reached its accounts through Study market assessments In the post-crisis period starting in the 1870s, using quantitative analysis, rather than factors such as earnings expectations and valuations.
Quant strategists including Solomon Tadesse wrote: “The current market valuation is clearly a bubble versus the March 2020 revaluation and its trajectory. Post-crisis fair value dynamics continue to call for a deeper correction to bring current prices in line with the underlying fair value reset.”
The found fair value of the S&P 500 was 3,020 points, in line with the historical post-crisis market valuation trendline.
The S&P 500 is down about 20% this year on recession fears, as the Federal Reserve raised interest rates to fight inflation.