JPM's "Gandalf" Quant Is Back With A Startling Warning | Zero Hedge

JPM's "Gandalf" Quant Is Back With A Startling Warning | Zero Hedge: "His short answer:

"The fact that market volatility is on the rise and the Fed is raising interest rates further increases the probability of a Bear Market. The current option-implied probability of a bear market (i.e. ~20% decline this year) is about 25%. While there is no way to predict a bear market, below we look at various scenarios, and estimate that the probability of a bear market may be nearly twice as large."
So according to the man whose every market forecast has been so far impeccable, the probability of a bear market: or a 20% or more drop in the S&P500 - is roughly 50%.

Not good.



 And what will make the permabulls even angrier is his proposed allocation to avoid the bear market:

In case an equity bear market materializes this year, investors should benefit from increasing allocation to cash or gold. Cash has zero correlation to all risky assets, while Gold has recently exhibited strong negative correlation to risky assets (e.g. -40% to equities)."



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