- Former Goldman Sachs Asset Management Chairman Jim O'Neill says volatility is doing something it hasn't done for 10 years.
- O'Neill says the extreme movement is a sign that an almost 10-year clear run of gains for stocks could end.
Former Goldman Sachs Asset Management Chairman Jim O'Neill told CNBC on Thursday that there are signs that a 10-year bull market in stocks is set to end.
Speaking at the Ambrosetti Workshop on the shores of Lake Como, near Milan, O'Neill told CNBC's Steve Sedgwick that the U.S. market was "definitely not cheap" and "very sensitive" to any bad news.
Weekly jobless claims in the United States have fallen to their lowest level since 1969 and the former Goldman executive noted that it is entirely possible that the U.S. Federal Reserve could find itself quickly reversing a dovish outlook that has been in place since early 2019.
O'Neill said any suggestion that the Fed was tightening would upset both the U.S. stock and bond markets.
"The idea that maybe the markets were right all along and the Fed will be tightening by the end of the year is not a crazy idea in my view," he said, before adding, "We might be entering the end of the 10-year almost clear bull market in equities. The kind of volatility we have seen in the last six months is very different from the past 10 years."
Investors and corporations alike are watching to see if trade talks between China and the United States will result in a summit between U.S. President Donald Trump and Chinese President Xi Jinping.
Earlier this week, the International Monetary Fund's managing director, Christine Lagarde, said the global economy is in "a delicate moment" and noted the clear downside risk of China's trade tensions with the U.S.
O'Neill said 85 percent of everything that has positively affected the world's economy since 2010 had come from the two countries and therefore any summit agreement between them needed to be considered as a "big deal."
The former trader issued a note of optimism for economies, highlighting that the latest set of Goldman Sachs data suggested that global economic conditions could soon arrest their decline
"Since last November they have all been going down, In the past fortnight, signs of them stabilizing. That in itself is a relief," O'Neill added.