Stocks, precious metals and cryptocurrencies rallied in the first month of the year, and market strategists say markets could pull back in the near future if the US Federal Reserve continues to raise rates and stick to policy. wider fit. In three days, on February 1, 2023, the Federal Open Market Committee (FOMC) will meet. While the market expects rate cuts, some analysts believe the Fed will continue to raise the federal funds rate. Chris Vermeulen, founder and chief investment officer of The Technical Traders, insists that the S&P 500 will slide 37% below its current position.
Strategist predicts potential market correction as Powell tightening of financial conditions anticipated
Markets are closely watching the upcoming Federal Open Market Committee (FOMC) meeting, scheduled for Wednesday, February 1, three days from now. Last week, Bitcoin.com News reported on how investors are closely following the decision of Jerome Powell, the 16th Chairman of the Federal Reserve. As the FOMC meeting approaches, discussions of the outcome have become widespread on social media.
A market strategist known as “The Carter” explained on January 27 that “there will be blood on February 1,” referring to the turmoil markets may face after Powell addresses the nation. While some investors expect a dovish Fed and possible rate cuts, Carter argues that Powell will instead continue to tighten and tighten.
the analyst notes that Powell has previously referred to a “broader tightening project” in three stages: quick increases to reach a neutral rate, measured increases to reach a “sufficiently restrictive” rate, and staying at the terminal rate for some time. “US Federal Reserve Chairman Jerome Powell will once again tighten financial conditions by aggressively addressing rate cuts,” Carter said in a Twitter thread.
The strategist expects the Fed chair to tackle this issue forcefully on February 1 and turn the conversation toward how long the Fed needs to hold the terminal rate and why. “Look it up to expand on the lessons of the 1970s,” Carter wrote. “Why the market continues to punch Powell in the face and not expect a backlash is beyond me. This is the craziest market setup here and now. There will be blood on February 1.”
Expert predicts a 37% drop in the S&P 500, while gold and silver will shine in the bear market
Speaking with David Lin, host and producer for Kitco News, chris vermeulenfounder and chief investment officer of The Technical Traders, saying that the stocks are due for a correction.
“Honestly, I think the S&P 500 could potentially drop another 37 percent or so from current levels,” Vermeulen told Lin. “That’s enough to create a lot of damage, a lot of stress, a lot of bankruptcies, whatever,” she added. By contrast, Vermeulen expects gold and silver to shine throughout the bear market. “This is when precious metals and miners take off,” Vermeulen insisted as he discussed market cycles.
Vermeulen isn’t the only investor who thinks gold and silver are going to take off. In December 2022, AuAg ESG Gold Mining ETF manager Eric Strand said gold will hit a new all-time high in 2023 and central banks like the Federal Reserve will revolve around rate hikes.
“It is our view that central banks will turn around their rate hikes and turn dovish through 2023, leading to an explosive move for gold in the coming years,” Strand saying. “So we think gold will end 2023 at least 20% higher, and we also see miners outperform gold by a factor of two.”
While gold has been on the rise and expectations for 2023 are high, Harry Dent, founder of HS Dent Investment Management, takes a contrary view on how gold will perform this year. Dent predicts that the yellow precious metal could lose between $900 and $1,000 in the next 18 months.
What are your thoughts on the possible market correction? Do you agree with the analysts’ predictions or do you have a different perspective? Share your thoughts in the comments section below.
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