It would appear that the deeper the world gets into 2024, the more frequent the warnings about a coming economic crisis become.
Indeed, from the January optimism marked by a conviction the FED will make substantial interest rate cuts this year and saw the start of a bull run that sent the S&P 500, Bitcoin (BTC), and gold to new all-time highs, the market has, seemingly, reached a turning point.
In the last few months, multiple voices have joined in to forecast a recession – Jamie Dimon of JPMorgan (NYSE: JPM), prominent personal finance author Robert Kiyosaki, Societe Generale’s (EPA: GLE) Albert Edwards, and many others are now seeing doom and gloom as the more likely future.
Picks for you
Recently, another expert joined a chorus to issue a dire – and arguably cynical – warning on an episode of the ‘Thoughtful Money’ podcast.
The S&P will peak before the election and then collapse to 14-year lows
In his appearance in the podcast, David Brady, a money manager, former FX trader, and Substack author, opined that the S&P 500 next move will be a collapse, potentially as large as 30%.
Brady added that the FED will, during the downfall, step in with measures such as rate cuts and quantitative easing to stabilize the situation, though he stated that the primary reason for the central bank pushing equities higher in this scenario is the fact that 2024 is an election year.
The expert concluded, however, that despite the S&P 500 index likely hitting new highs before the election, the uptrend will be unsustainable and that the stock market will ‘drop precipitously’ and the benchmark will fall as low as 3,500 points – if not lower – thereafter.
It is noteworthy that a collapse to 3,500 – despite constituting a 30.31% fall from the current levels and a 33.39% drop from the recent ATH – would still revert the S&P 500 only to the October 2022 levels, perhaps highlighting the feverish growth in the last 18 months.
The Good the Bad and the FED
Another concern Brady highlighted is that inflation has been rising in recent months,
Indeed, with CPI prints coming in hotter-than-expected month after month, even the FED Chair Jerome Powell recently admitted that there is decreasing confidence in the central bank’s ability to hit the 2% target.
In recent months, many experts have been warning that the FED’s strategy is fey, with Gordon Johnson, the Founder and CEO of GJL Research, going as far as to say that the coming disaster is the ‘most predictable forthcoming inflation crisis ever.’
In recent weeks, there has also been a reemergence of talk about further rate hikes.
The situation, particularly if Brady’s prediction of a deep summer pullback, however, would put the FED in a sort of a Mexican standoff as inflation may run rampant without higher rates, but higher rates would be likely to force a rerun of 2008 and 1929.
Buy stocks now with eToro – trusted and advanced investment platform
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
