Charles Schwab CIO Liz Ann Sonders Sees the Market Within a Bull Pattern

Liz Ann Sonders of Charles Schwab offered a cautiously bullish analysis of the market at the recent Inside ETFs conference. She cited Sir John Templeton’s statement that “bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” She sees the current market in the “mature” phase of the bull cycle. “I don’t want to dismiss any of the concerns out there about the global economy, but if you look at the data, it’s not as bad as the doom-and-gloomers suggest,” she said, placing the risk of a U.S. recession at about 25%. Regarding China, she described herself as “in the soft-landing camp,” and suggested the risk to the U.S. is not large because of the minimal role exports to China play in U.S. GDP. She clearly stated the current market is “not another 2008,” describing it instead as possibly “another 1998 or 2011 based on market behavior.” She suggested the Fed is unlikely to tighten as rapidly as it had suggested, which portends well for the market in 2016. More broadly, she observed that “within secular bull markets, you can go through cyclical bear periods that have higher likelihoods of correction and volatility.” That is precisely where Sonders’ seems to believe we are now.