Bearish strategists are sounding the alarm about a potential stock market crash as the economy shows signs of cooling down. Despite the S&P 500 inching closer to hitting record highs, Wall Street's biggest bears remain concerned about looming recession indicators and job market weakness. These factors have led some experts to predict a significant downturn in the stock market, with estimates of a 70% decline amid lofty valuations.

One notable voice cautioning investors is Mark Mobius, a billionaire investor who recently highlighted a significant decline in M2 money supply, the largest drawdown in nearly a century. This decline raises concerns that there may be less capital available for discretionary spending, which has been driving economic expansion and the bull market on Wall Street.

Mobius advises investors to hold 20% of their portfolios in cash to prepare for potential stock price declines. He suggests seeking out companies with little to no debt, moderate earnings growth, and a high return on capital, urging investors to be ready to re-enter the market when the time is right.

Economist Steve Hanke supports the pessimistic outlook, warning that a recession is likely to hit the United States in early 2025. Hanke highlighted indicators such as a rise in the unemployment rate to 4.3%, the highest level since the pandemic, along with slowdowns in retail sales, housing market activity, and manufacturing. These micro-level indications, according to Hanke, align with the macro monetary picture of an economic slowdown and decreasing inflation.

Adding to the chorus of concerns, Jon Wolfenbarger, founder of BullAndBearProfits.com, underscores the idea that a recession could result in a substantial 70% decline in the stock market due to elevated valuations. Wolfenbarger points to under-the-radar signals, including a drop in the year-over-year rate of change in employment growth to 0%, as well as a decline in average weekly hours worked and manufacturing employment. These factors suggest a potential recession similar to those witnessed in 2008 and 2020.

While the warnings of an imminent recession and stock market crash persist, not all of Wall Street is in agreement. Goldman Sachs, for instance, recently dismissed recession fears as "overblown." The investment bank noted the strength of US consumers and the continued growth of corporate earnings. Additionally, the Federal Reserve's shift to a more dovish stance and anticipated interest rate cuts provide some optimism.

Goldman Sachs further predicted that trillions of dollars of cash on the sidelines could enter the stock market, potentially pushing the S&P 500 up by 7% to reach 6,000 once the winner of the Presidential election is determined in November.

As the debate between bullish and bearish sentiments rages on, investors are left to weigh the warnings of impending turmoil against the potential for market gains. Only time will tell whether the stock market will weather these concerns or face the significant decline predicted by the bearish strategists.