There is a possibility of killing in the US stock market on Wednesday Entertainment bouche Comparing the devastation on the bull menu in the coming months and years, Guggenheim Partners Global Chief Investment Officer Scott Minard told MarketWatch in an interview.
The prominent CIO on Wednesday said he envisioned a “terrible summer and fall” for stock-market investors, including a Nasdaq Composite Index comp.
Finally unveiled, its 75% submerged from November 19, 2021, the highest (currently it is about 28% below) and the S&P 500 SPX,
Rolled 45% from January 3, 2022, the highest (currently 18% lower) as we move towards July.
“It looks a lot like the fall of the Internet bubble,” Maynard said, referring to the stockpile of technology in 1999 and early 2000.
What drives Minerd’s pessimism? He fears that the Federal Reserve has made it abundantly clear that it aims to continue raising interest rates, despite the possibility that it could wreak havoc on the equity market and elsewhere.
“What’s clear to me is that there is no market, and I think we’re all waking up to that fact now,” Maynard said.
The CIO was referring to the so-called Federal Reserve Put option, a shorthand for the belief that the US Federal Reserve would rush to rescue the tanking market – a method that previous Fed chairs have denied.
More about bear-market fears: Why are stocks falling? The push of inflation is killing the fragile ‘bear market’ bounce.
On Tuesday, Fed Chairman Jerome Powell also sought to mislead investors into believing that banks should rely on investors to throw a buoy as monetary policymakers try to tackle external levels of inflation.
“Restoring price stability is an unconditional need. That’s the decent thing to do, and it should end there. ” “Some pain may be involved,” Powell added.
Minerd said he believes the Fed will continue to raise rates “unless they see a clear break in the inflation trend and they are willing to go above the neutral rate,” referring to a level of interest rates that does not stimulate or restrain the economy.
Earlier this month, the Fed’s rate-setting committee raised the benchmark federal-fund rate to the target range between 0.75% and 1%. It is expected to raise rates by about 50 basis points during the June 14-15 rally, as US inflation stood at an annual rate of 8.3% in April, according to the Department of Labor. This is well above the Fed’s target of 2%.
Guggenheim’s executive said a meeting of former Federal Reserve policymakers and prominent economists on May 13, including John Taylor, John Kochran and Michael D. Bordeaux, hosted by the Hoover Institution just after the Fed’s May meeting, forced him to accept more. Bearish position on equity and the market as a whole.
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He said attendees at the Hoover conference estimated that the Fed would have to raise interest rates from 3.5% to 8% to hit neutrals, which advised him that the US Federal Reserve might have to dial rates until something happened in the economy or market, or both. .
“The Fed seems to have very little concern about the continuity of what I think,” Maynard said. If that happened then we would all be in for a treat, ”he said. Investors say a severe recession could give central bankers some respite, but there may be no respite from growth unless there is already a lot of damage.
So, as long as the sell-off is relatively orderly and we don’t have a sudden crash, the Fed is going to raise inflation more than inflation. [to the neutral rate]He explained.
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Some Wall Street professionals, including Wells Fargo & Co. WFC
Chief executive Charlie Scarf said it would be difficult to avoid a recession against the backdrop of rate hikes, and Minard agreed.
“When you start to line up all the data, the summer pain is where we’re heading,” he said, noting that things could get to the bottom by October.
In a draft research report reviewed by MarketWatch, Maynard says:
If the Fed continues to rise over time, we will find ourselves feeling the effects of increasingly limited monetary policy. Before reaching this terminal rate, the Fed will increase the risk of additional shooting, causing financial accidents and starting a recession.
Minerd said the Fed is moving toward tightening the financial situation just as employment is showing some easing.
Last check Wednesday, S&P 500, Nasdaq Composite and Dow Jones Industrial Average DJIA,
In a dry sale, it fell by at least 3%.