A prominent bullish strategist, who advised investors in June that sound economic fundamentals pointed to further stock market gains in the second half of 2017, sees recessionary and bear market conditions on the horizon, per a recent interview with CNBC. Joseph Zidle, a portfolio strategist with Richard Bernstein Advisors LLC, told CNBC that we are in a "late cycle environment," the "ninth inning of this bull market." Pushing the baseball analogy further, just as an inning can last for a very long time, since that sport is not constrained by a time clock, he clarified that the bull market "could go on still for quite some time just based on the fundamental earnings picture."

"This is nirvana for corporations right now," with low interest rates fueling accelerating profit growth, Zidle says in CNBC's November 11 story. However, he expects that restrictive monetary policy will end the good times within the next year or so. (For more, see also: Stocks' Big Threat Is a Bond Collapse: Greenspan.)

Inverted Yield Curve: Recessionary Trigger

Zidle sees a number of dangers.

His big concern is "the risk that the Fed tightens too much," pushing interest rates up too high against a background of weakening inflation. He anticipates that the Fed's actions will produce an inverted yield curve, with short-term interest rates greater than long-term rates, sometime within the next 12 to 18 months, CNBC indicates. Whenever the yield curve inverts, Zidle notes, history shows that a recession typically follows about 12 to 18 months later. As a result, Zidle's concerns about a Fed-triggered bear market may take a year or more to develop. (For more, see also: The Inverted Yield Curve Guide to Recession.)

^DJI Chart

DJI data by YCharts

As a prelude to inversion, the yield curve has undergone noticeable flattening since the start of 2017, Bloomberg reports. A flattening yield curve, let alone an inverted one, will have a particularly negative impact on the earnings of banks and other financial institutions that tend to borrow at short-term rates and lend at long-term rates. According to data from the Fed cited by Bloomberg, profit margins at banks have improved from their lows in 2015, but still are below their 30-year averages.

Fixed income investors will have diminished incentives to invest in longer-term instruments, while equity investors, anticipating an oncoming recession, will tend to move into more defensive stocks, causing selloffs in other sectors of the market, per Zacks Investment Research. Meanwhile, famed fixed income fund manager Bill Gross of Janus Henderson Investors warns that, given the level of debt in the U.S. economy, increasing interest rates by only 20 to 30 basis points can trigger an economic slowdown, as Bloomberg indicates. (For more, see also: The Impact Of An Inverted Yield Curve.)

Tax Reform: Smaller Concern

As far as tax reform is concerned, Zidle indicated to CNBC that he does not expect a bill to pass Congress this year, and he anticipates its potential impact on the markets to be relatively minor compared to actions by the Fed. Nonetheless, last week the Dow Jones Industrial Average (DJIA​) was down a modest 0.5%, its worst weekly performance since September. Investor disappointment over the slow progress of tax reform has been proposed as one reason for the slight decline, according to The Wall Street Journal.

Still Bullish

Meanwhile, Jonathan Golub, chief U.S. equity strategist at Credit Suisse Group (CS), remains unabashedly bullish, per another CNBC report. He predicts that the S&P 500 Index (SPX​) will reach 2,875 in 2018, 11.5% above its opening value on November 14. He sees low risk for a recession, and thinks that no big changes to tax policy actually would be a good thing. His reasoning: stimulative tax changes that boost wage inflation will provoke a reaction by the Fed that is "going to crush this thing." Golub recommends that investors rotate out of high-multiple technology stocks and into more defensive consumer staples, especially those with solid dividends.