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"We are starting to have the smell of a possible slowdown," Kristina Hooper, global market strategist at Invesco, wrote Monday.
Taken together, the backdrop indicates the end of the intoxicating days of the past year.
"We have already started the next bear market," said Cole Smead, chief executive of Smead Capital, a Seattle-based investment firm.
"The technology of big caps and the darlings of growth are absolutely crushed," he said.
Goldman Sachs, meanwhile, is not afraid of an imminent bear market.
"We expect the current bull market for US equities to continue into 2019," said David Kostin, chief US equity strategist at Goldman Sachs.
Here is the slowdown in profits
But Kostin urged customers to be cautious in reducing inventories and increasing cash balances.
The biggest hurdle can be profits, the central driving force of stock prices. Earnings per share of S & P 500 will slow sharply to 6% in 2019 and only 4% in 2020, predicts Goldman Sachs.
That's all the reversal from the frenetic pace of earnings growth in 2018, estimated at 23%.
Domestic economic growth may also have peaked. US GDP growth will slow, going from 4.2% in the second quarter of 2018 to 1.6% by the end of 2019, according to Goldman Sachs projects.
Goldman: 43% chance of recession in three years
The good news is that many economists think that the recovery after the Great Recession will continue until at least July 2019, making it the longest expansion of modern history.
Declaring a recession two years later is very difficult, if not impossible. Many things could change. For example, a favorable resolution of the US-China trade war, perhaps under the impetus of Wall Street turmoil, could inspire a sustainable rebound in the stock market and the economy. real.
And the big problem is the Fed and interest rates. Nobody, not even the Fed, knows exactly what level of interest rates should be high before slowing down the economy.
Will the Fed come to the rescue?
Fortunately, the housing downturn does not appear to pose the same systemic threats as it did ten years ago.
"Even if the market were to reverse, it would no longer have the ability to destroy the economy," wrote Monday to Sheffherson, Pantheon Macroeconomics' chief economist.
Nevertheless, the inability of the housing market to absorb rate hikes could be a canary in the coal mine for the economy in general.
Mr. Hooper of Invesco believes that the Fed, in response to the economic slowdown and the wars that are looming on the horizon, "is likely to pull out of the accelerator" in 2019.
Goldman Sachs, meanwhile, think that the strengthening of inflation will cause a further rise of five times by the Fed by the end of 2019.
Michael Wilson, equity strategist at Morgan Stanley, also told clients Monday that Fed officials would probably not come to the rescue because they "just do their job".
"We do not expect the Fed to bail out equity market players," Wilson wrote.
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