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EconoMeter: Will stocks 'correct' by 10% by June?

Economists, CEOs split on optimistic expectations

Roger Showley, U-T SAN DIEGO

Friday, January 10, 2014

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Kelly Cunningham, National University System

Answer: NO

It is nearly impossible to specifically predict such precise percentages and timing of the market. With the Federal Reserve signaling the start of tapering their massive bond-buying program and interest rates rising, a correction is anticipated. The effect of unwinding such a massive $4 trillion balance sheet is unknown and unprecedented. After a big run-up in stocks last year, further increases in an already aging six-year bull market are likely to be limited. New investors will be coming to the party late with price-earnings multiples where they are now. The market therefore will probably flatten and slightly decrease this year.