Only during the financial crisis of 2008, when Lehman Brother’s collapsed along with Fannie Mae, Freddie Mac, and other major financial institutions, and the 1987 market crash, when the Dow Jones Industrial Average declined 22% on October 19th, has the market priced in more frightening scenarios than it does today. Even the 1987 market crash did not cause an economic recession. Given the likely two-quarter duration of these shocks, the odds of a global recession still remains low. With the massive monetary stimulus and economic benefit of lower oil prices, the probabilities of a sharp market and economic rebound are strong.
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