CTVA - A '70s style recession would push S&P 500 to 2525 - SocGen

A recession is 74% priced into stocks and there is a remote chance economic conditions could push the S&P 500 (SP500) (NYSEARCA:SPY) more than 1,000 points lower, Societe Generale says. Fair value of the S&P based on earnings remains at 3,850, but a couple more dominoes need to fall before the market sees a "true bottom," Manish Kabra, SocGen head of U.S. equities, wrote in a note Tuesday. Those dominoes will be credit and housing markets pricing in higher recession fears, Kabra said. "The current 24% drop in equities suggests we have discounted 72% of an average recession (i.e. a 72% recession probability is priced in)," he said. "At 3200 the S&P 500 will fully discount a typical recession." "An average recession that would be more destruction-focused that typically helps to clear out extreme inflation and excesses." "The question that is emerging in the current cycle is whether inflation will

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A '70s style recession would push S&P 500 to 2,525 - SocGen