A long bear market in US stocks is coming? Goldman Sachs and BlackRock both flash "red lights".

As the trade war launched by Trump continues to escalate, Wall Street strategists are issuing increasingly pessimistic warnings about the stock market outlook. On Monday, BlackRock strategists Jean Boivin and Wei Li released a report downgrading their three-month rating on US stocks from "overweight" to "neutral," stating that "risk assets will face greater pressure in the short term against the backdrop of significantly escalating global trade tensions." Meanwhile, a Goldman Sachs strategy team pointed out that as economic recession risks intensify, the current stock market sell-off is likely to evolve into a longer-lasting cyclical bear market. Several international stock indexes currently meet the technical definition of a bear market, with the S&P 500 index falling by up to 20% from its historical high two months ago. Goldman Sachs strategists, including Peter Oppenheimer and Lilia Peytavin, emphasized that cyclical bear markets typically last around two years and take five years to recover to their initial level, showing a fundamental difference from short-term event-driven volatility. Goldman Sachs strategists still consider this sell-off to be event-driven. They stated that in both types of bear markets, stocks tend to decline by an average of 30%, but "differ in duration, with event-driven bear markets being shorter in duration and recovering faster." However, Goldman Sachs economists have raised the probability of a US economic recession to 45%, and the firm's strategy team, along with some other Wall Street forecasters, have revised their target for the S&P 500 index downward. BlackRock CEO Larry Fink previously stated that most CEOs he spoke with believe that the US is already in a recession. Meanwhile, traders have significantly increased bets on the Fed cutting interest rates, fearing that the US government's trade policies could lead to global economic contraction. The strategists at BlackRock's research department stated that they are increasing their allocation to short-term US treasuries, as short-term US treasuries may benefit from a shift of funds towards safe-haven assets. Boivin and Li wrote, "The comprehensive response of the international community and specific negotiations with the US will take time, making it difficult to predict when and how this will be resolved. Massive wealth losses could dampen market sentiment and consumer spending." Despite global stock markets losing nearly $10 trillion in market value over the past three days, most analysts believe that the financial system is not facing imminent risks. However, signs such as freezing in the corporate bond market and a spike in default risk indicators reflect the mounting pressure from a sharply deteriorating economic outlook.