There are two triggers for meaningful bear markets in stocks: rising interest rates and the onset of war.
Russian stocksAgainst a backdrop of rising oil prices and a flight to quality into U.S. Treasury bonds, the combined messages from those markets appear menacing.
Add to those concerns renewed Chinese flyovers in Taiwan, which prompted the Taiwanese Air Force to scramble andIf there is even an economic war between the West and Russia resulting in stiff sanctions, like cutting off Russian energy exports, blocking Russia from using SWIFT — a mechanism for international financial transfers — or placing export controls on goods heading to Russia, the global economic stakes rise dramatically.
The stakes are even higher if Putin and China's President Xi Jinping are coordinating their efforts to destabilize Western alliances and fracture already-frayed relations.That would be relatively better for risk assets, but far from a friendly overall environment, especially given a three-year bull run, lofty valuations and speculative excesses in some corners of global markets.
The pandemic-induced bear market in 2020 lasted 21 trading days as the S&P 500 tumbled 34% in the most compressed bear phase on record. I'm considerably less optimistic that the next bear market, if this is indeed the start of one, will be over so quickly, or do so little damage.— Ron Insana is a CNBC contributor and a senior advisor at Schroders.
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