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Analyst warns of “a straight free fall” for Wall Street and stock market

Analyst warns of a straight free fall for Wall Street and stock market
Elmaz Sabovic

Judging by the current narrative on Wall Street, it is evident that there is a profound sense of unease regarding the future of the stock markets and, by extension, the broader economy, as analyst Charles Gasparino gives his take on the situation.

Although it is commonly believed that financial experts lack precise foresight—as demonstrated during the 2007-08 financial crisis—many insiders had anticipated the crisis but were too frightened to publicly acknowledge it, while others, particularly hedge fund managers, refrained from drawing attention to their market positions.

Stock markets and the economy are afraid of the uncertainty

The current unpredictability in stock market forecasts stems from significant policy missteps, including excessive spending and money printing, which have disrupted traditional analytical tools. 

Additionally, the political and economic policies proposed by the two leading presidential candidates further exacerbate this confusion. This period is particularly challenging for economic forecasters, investors, consumers, and American workers striving to plan for the future. 

The erratic nature of public policy-making has contributed to this environment, with a bipartisan history of questionable decisions spanning at least two decades. The contemporary manifestation of such policies is particularly troubling due to the increasing stakes.

Different presidents, different approaches, but a growing U.S. debt

Former President Donald Trump and current President Joe Biden’s economic policies have introduced significant volatility. Despite projecting confidence, Trump failed to deliver on key promises such as building a southern border wall and adding an estimated $8 trillion to the national debt, exacerbated by spending during the COVID-19 pandemic. 

Although he implemented beneficial measures like tax cuts and regulatory reductions, he missed opportunities to address long-term fiscal responsibilities.

Conversely, Biden has continued and amplified this spending trend, advocating for extensive expenditures on initiatives like student debt relief and green energy projects. His administration’s spending has raised concerns about the sustainability of the national debt, which is projected to reach levels matching or exceeding those during Trump’s tenure.

The Congressional Budget Office forecasts that the debt growth under Biden will likely match or surpass Trump’s by early next year. This debt, now at nearly 120% of the U.S. Gross Domestic Product, poses significant risks if unforeseen events like war or shifts in creditor confidence necessitate further spending.

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