Everyone is recovering except the US stocks are falling

Everyone is recovering except the US stocks are falling
Everyone is recovering except the US stocks are falling

In light of the bleak expectations for the US economy that are issued from time to time on the impact of the tightening of US interest rates and the start of the country entering the tunnel of , the chief equity analyst at Goldman Sachs (NYSE:GS), Peter Oppenheimer, stated that the US stock market may witness more losses with Interest rates will continue to rise next year.

On the other hand, US stocks opened sharply lower and have not yet recovered from the Fed’s shock, while most commodities and metals rose in the current moments.

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S&P . Index

Oppenheimer explained that stocks typically fall by about 30% during the so-called bear market cycle, indicating that stock prices have room to fall further.

Given that the S&P 500 is down about 19% so far this year, the Goldman Sachs analyst sees stocks could drop by another 10%, if the US economy enters a recession.

Goldman Sachs expects the S&P 500 to fall to 2,900 points, meaning it expects to fall by nearly 1,000 points.

This is also explained by Goldman Sachs that he expects that the US Federal Reserve may not start cutting rates again until the unemployment rate reaches 5-6%, when it will be confident that inflation will decrease, and therefore the negative effects will continue until the desired goal is achieved.

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The worst is yet to come

Popular Wall Street investor Carl Icahn issued an ominous warning to investors yesterday, saying that “the worst is yet to come”.

Speaking at Market Watch’s “Best Newest Ideas in Financial Markets” festival, the 86-year-old Icahn posted a bleak outlook for the economy while advising some opportunities for investors.

“I think a lot of things are not that expensive and will stay that way,” he said, adding that oil refiners and fertilizer companies are the ones to watch. He referred in particular to the CVR Energy procedure.

Investors explained that inflation played an important role in the market decline.

“Inflation is horrible,” he said, noting that historians believe high prices led to the fall of the Roman Empire.

It’s something you “can’t cure,” he said.

Finally, it should be noted that Carl Icahn explained that debt and money printing were the main culprits in the situation: “We printed a lot of money, and we just thought the party would never end. And the party’s over.”

Urgent – Carl Icahn: The worst is yet to come for investors… and inflation cannot be cured

Interest forecast in the coming period

The world’s largest asset manager, BlackRock, predicts that the Fed will continue to raise rates for a period of time, and the upcoming data is the final say in the depth of the tightening program and raising rates.

The question now, says Rick Rieder, head of the global quota investment team, is: Will slowing growth cause the Fed to stop raising interest rates and its monetary policy tightening program, and start adjusting demand with already tight monetary conditions? The question remains unanswered with the Fed not announcing a clear plan.

As one asset manager says, “The markets are actually preparing for what the Fed may do by continuing its rate hike program to reach the tightening zone.”

And the entry of interest rates into the tightening zone means very high interest rates.

Interest will be up to 5%.

Experts at Rabobank said in a research note that the US Federal Reserve may continue to raise interest rates until it reaches the 5% levels in light of the strong rise in US inflation and the need to control it during the coming period.

In light of these new expectations, the US Federal Reserve will continue to raise interest rates until it reaches 5% in the end, instead of only 4.50%, which was expected earlier, and the main reason for this is the continuation of the spiral of price hikes, which would keep inflation high. .

Economists at Rabobank noted that with the Fed prioritizing inflation over employment now, this will push it to raise rates more than expected, and the Fed may reach a peak rate near 5% next year.

Urgent: Ray Dalio warns of a sharper decline in stocks.. “Recession is coming and bonds will not be sold.”

Bonds you will not find anyone to buy them

While Dalio said he expects equities to take further losses, he cited the bond market as a particular area of ​​concern.

The problem, as Dalio sees it, is that the Fed no longer monetizes debt issued by the federal government. The Fed plans to double the rate at which Treasury and mortgage bonds are rolled out of the central bank’s balance sheet in September.

“Who will buy those bonds?” Dalio asks, before noting that China’s central bank and pension funds around the world are now less incentivized to buy, in part because the real yield that bonds provide when adjusted for inflation is significantly lower.

When asked if “cash is still unimportant”, in a distinctive comment that Dalio repeated on several occasions, he said holding cash is still an “insignificant investment” because interest rates are not yet high enough to offset them under the full impact of inflation. However, the real benefit of cash depends on ‘how it compares to other assets’.

“We are in a position to deleverage,” Dalio concludes.

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unemployment data

Unemployment benefits data was released today, after the Fed issued its decision yesterday to raise interest rates by 75 basis points, to the highest level since the global crisis in 2008, and the Fed said in its statement issued yesterday that it expects unemployment to rise to 4.4% next year.

The US economy received 213 thousand unemployment claims, and experts expected that 218 thousand applications for unemployment benefits would be received, an increase from 213 thousand received before the revision and a decrease to 208 thousand.

Thus, the 4-week average of jobless claims fell to 216.75K, after recording an average of 222.75K last week.

Markets now

US stocks recorded strong losses at the beginning of today’s trading, and opened with sharp losses and did not recover yet from the Fed’s decision to raise interest rates.

The Dow Jones is now down 183 points, or about 0.64%, to record 30,000 points. The S&P fell 28 points, or about 0.80%, to 3,761 points.

While the Nasdaq index fell by about 1% and loses 108 points to settle at 11529 points.

US stocks were hit by the US inflation data released last week, as well as the Fed’s decision yesterday.

This boosted the strong demand for the dollar and weakened the demand for US stocks by raising interest rates to control high inflation.

gold now

The spot contracts for gold, the US dollar, settled during the current moments at levels near 1671 dollars for an ounce, down by 0.2%.

On the other hand, futures contracts for the yellow metal rose during these moments of today’s trading, equivalent to 0.2%, down to levels near 1679 dollars an ounce.

oil now

The US light NYMEX crude rose during these moments of trading, today, Thursday, to levels of 83 dollars a barrel, by 0.5%.

On the other hand, Brent crude rose to levels of $90 during these moments of today’s trading.

dollar now

The US dollar index maintained its gains after the Fed’s decision to raise interest rates.

The dollar index is now approaching the 101 levels, up about 0.5%.

bond now

The 10-year US Treasury yield rose by about 4.5% to 3.660, which is the highest level in 12 years.

The article is in Arabic

Tags: recovering stocks falling

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