With the world’s major central banks entering an era of major tightening to rein in soaring inflation, Wall Street analysts warned on Friday that stocks were far from bottoming and might see a bigger sell-off this summer.
Brunello Rosa, chief executive and research director of macroeconomic consulting firm Rosa & Roubini, said in an interview on Friday that it is time for investors to reassess the fundamentals of the global economy. It’s hard to be completely optimistic regarding the market.
U.S. stocks crashed on Thursday,Dow JonesAfter plummeting more than 1,000 points, completely erasing the gains of the previous trading day, US stocks continued to fall once more on Friday.Dow JonesIt fell nearly 100 points, its sixth straight weekly loss. Richmond Fed Bank President Thomas Barkin said on Friday that he would not rule out a three-yard hike, urging the Fed to raise interest rates as soon as possible, although Chairman Powell played down the possibility this week.
Rosa believes that global central bank tightening might eventually lead to economic contraction, with investors initially cheering Fed Chair Powell’s downplay of a 75-basis-point rate hike, but that still implies multiple 50-basis-point rate hikes in the coming months. Despite all the good words from central bankers, the reality is that a lot of tightening will eventually cause the economy to shrink.
Rosa added that inEURregion and the United States, they are far from realizing that there will actually be some form of contraction in economic activity, the Ukrainian-Russian war is expected to last longer than many market participants expected, coupled with other headwinds, such as supply chains Problems, soaring inflation and higher interest rates, predict more heavy stock market sell-offs this summer.
Wall Street is full of pessimism recently. According to data analysis by the American Association of Retail Investors (AAII), Bank of America pointed out that the bearishness of retail investors reached a new high during the global financial crisis in March 2009.
David Wright, a big bear on Wall Street and a well-known investor, also recently said, “We are in the biggest bear market of my life.” It is predicted that this wave of bear market has just begun, and there will be another wave of big market.
