Dec 26, 2018

The rise of the American bear

Illustration: Lazaro Gamio/Axios

Raise a glass of Christmas cheer: We’re now, officially, in the best possible kind of bear market.

The big picture: For a few years now, the U.S. economy has been at full employment, which means that most people looking for a job can find one. (There is, of course, some skill mismatching. And some jobs are under-employing.) The next step of the American Dream, after you get a job, is accumulating wealth, often by investing in stocks. Now, for the first time in a decade, stocks are on sale: They can be bought at a 20% discount to where they were trading just a few months ago. 

  • If previous bear markets are any guide, stocks are likely to remain cheap for well over a year. So if you’ve been needing a nudge to sign up for your employer’s 401(k), now’s a very good time to do so. 

The bottom line: When stocks fall because the economy is in a recession and unemployment is rising, that’s a sign of broader misery. When they fall in a growing economy with full employment and record corporate earnings, that might mean a loss for the owners of capital. But it's a rare opportunity for those of us who work for a living. 

The backdrop, from CNBC: "[A] bear market is a 20 percent or more drop from a recent peak. The S&P 500 hit that milestone on [Christmas Eve], dropping 20 percent from its 52-week high."

  • Japan stocks plunged and other Asian markets fell yesterday, reflecting the U.S. rout.
  • ("The S&P 500 is still 7 points away from completing a full-blown bear market drop," Bloomberg notes.)

This could take a while: "Since World War II, bear markets on average have fallen 30.4 percent and ... lasted 13 months, according to analysis by Goldman Sachs and CNBC. ... [Stocks took] an average of 21.9 months to recover."

  • "Even when stocks enter 'correction' territory, which is defined by at least a 10 percent drop from a recent high, there’s a long road to recovery. History shows corrections last four months, and equities slide 13 percent."

Go deeper

Wisconsin Supreme Court blocks governor from delaying state's primary

Tony Evers. Photo: Nuccio DiNuzzo/Getty Images

Wisconsin's Supreme Court on Monday blocked an executive order by Gov. Tony Evers (D) that attempted to delay in-person voting for the state's primary election — currently scheduled for Tuesday — until June 9.

Driving the news: Judges ruled 4-2 along ideological lines that Evers does not have the power as governor to unilaterally postpone the election, despite the fact that the state has a stay-at-home order in place due to the coronavirus pandemic.

Go deeperArrowUpdated 44 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 5 p.m. ET: 1,331,032 — Total deaths: 73,917 — Total recoveries: 275,851Map.
  2. U.S.: Total confirmed cases as of 5 p.m. ET: 356,942 — Total deaths: 10,524 — Total recoveries: 18,999Map.
  3. 2020 update: Wisconsin governor orders in-person primary voting delayed until June.
  4. States latest: West Coast states send ventilators to New York and other states with more immediate need — Data suggest coronavirus curve may be flattening in New York, Gov. Andrew Cuomo said.
  5. World update: U.K. Prime Minister Boris Johnson moved to intensive care as coronavirus symptoms worsen.
  6. Stocks latest: The S&P 500 closed up 7% on Monday, while the Dow rose more than 1,500 points.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Stocks jump 7% despite bleak coronavirus projections

People passing by the New York Stock Exchange amid the coronavirus pandemic. Photo: John Nacion/NurPhoto via Getty Images

The S&P 500 closed up 7% on Monday, while the Dow rose more than 1,500 points.

Why it matters: The huge market surge comes amid rare optimistic signs that the spread of the coronavirus may be slowing in parts of the country, including New York. But government officials say this will be a difficult week, while economists — including former Fed chair Janet Yellen today — warn that the pandemic could have a catastrophic impact on the global economy.