Bob Doll: Stocks Likely to Breach October Low

Recessions have followed seven of the last nine Federal Reserve tightening cycles, and "'the' bear market low has always occurred after a recession has started," Doll wrote.

The Fed will need to see much more proof that inflation is falling before it considers rate cuts, he predicted, noting that "stocks tend to struggle most when the Fed begins cutting rates."

Among Crossmark's other conclusions, the firm expects:

• The U.S. economy to slow sequentially each quarter in 2023
• A mild recession before year-end
• The Federal Reserve to raise interest rates once more then keep them flat throughout this year
• Inflation to keep falling but not reach Fed targets
• Earnings estimates for 2023 and 2024 will continue to decline
• Non-U.S. markets to again outperform U.S. markets this year
• Bulls and bears both to be frustrated this year
• A somewhat chaotic domestic and global political environment

The Silicon Valley Bank failure confirms that Fed interest rates and bond yields can't go much higher "without breaking something major and triggering a recession," he wrote.

"The banking crisis is a reminder that the financial market landscape will remain risky for as long as the cost of money is rising," he wrote. "Policymakers have indicated they will do whatever is needed to support the financial system and hopefully prevent a recession. In our view, they will ultimately fail but have bought themselves more time."

(Image: Bloomberg)