Recession calls are growing by the day, but the stock market remains wary of fully pricing

Despite enduring the worst start to a year since 1970, the benchmark S&P 500 (^GSPC) is still trading 13% above a widely-cited recessionary target of 3,400

We may not have the strongest hand just now, but it’s not bad enough to force many investors or businesspeople to fold

In Colas' view, the math on 3,400 works out to assuming the average 25% drop in earnings and putting an earnings multiple of 20x on the S&P 500

Strategists at Bank of America Global Research last week cut their year-end price target on the benchmark to 3,600 from 4,500

Sentiment is so poor that equity allocations are the lowest since the 2008 financial crisis and cash levels are at the highest since 9/11

The typical recession, as noted above, sees earnings per share fall by 25 percent, a decline that would put that figure at $42 per share per quarter

“The combination of these two factors can keep demand steady for longer than is typical at the end of an economic expansion," Colas said