Investors Brace For Stock Market and Real Estate Crash-
(Weekly Market Report)
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Stocks in the United States sank dramatically on Friday, pulled down
by concerns about rising interest rates. Investors in the United
States and abroad are anxious that the Federal Reserve’s aggressive
approach to controlling inflation would result in a full-fledged
recession.
The major averages all had their fifth negative week in a row, with
the Dow losing 4%. The S&P 500 and Nasdaq fell 4.65 percent and 5.07
percent, respectively. The Dow set a new 2022 low and fell below
30,000 for the first time since June 17.
Full Report Contents
* 0.1 Hard Landing Ahead
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* 0.2 Last Market Week’s Drop
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* 0.3 Coming Unemployment & Depression 2023
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* 1 KEY EVENTS & CALENDAR
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* 2 RATES
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* 3 COMMODITIES
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* 3.1 OIL
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* 3.2 GOLD & PRECIOUS METALS
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* 4 CRYPTOCURRENCY
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HARD LANDING AHEAD
The Federal Reserve is striving to keep inflation in the sweet spot,
not too high and not too low. But as a history of causing recessions
when it tries to raise rates.
The Fed raised interest rates by 75 basis points last Wednesday and
signaled that another move is anticipated in November. As a result,
bond yields increased, prompting 10-year and 2-year Treasury rates to
reach a decade-high.
Last week’s Federal Open Market Committee (FOMC) address, Federal
Reserve Chairman Jerome Powell verified a handful of my major
expectations. He made a case for additional suffering and a long
winter by promising to keep raising interest rates into next year.
The Fed now expects unemployment to rise through 2024 and the US
economy to expand at less than 2% annually through 2025.
THIS IS UNDOUBTEDLY A BEST-CASE SCENARIO, as Powell recognized
Wednesday that “A SMOOTH LANDING IS REALLY DIFFICULT” and that
those modest possibilities drop if the Fed needs to be more
restrictive.
Major institutions are now revising their projections for the fourth
quarter of 2022. Goldman Sachs, for example, reduced its year-end S&P
500 objective and forecasted at least a 4% drop from here.
LAST MARKET WEEK’S DROP
The consumer discretionary sector of the S&P 500 fell along with
energy-related names. Major technology firms, which are typically
considered growth equities, also declined. This includes well-known
brands like Apple, Amazon, Microsoft, and Meta Platforms. To me, this
is just another indicator of a slowing economy.
On the economic front, the Flash US PMI Composite Output Index fell to
49.3, which is in the contraction zone but is better than the previous
month’s reading of 44.6.
The British pound fell to a three-decade low against the US dollar in
foreign exchange markets after a tax cut plan in the UK sent
shockwaves through the markets.
COMING UNEMPLOYMENT & DEPRESSION 2023
Yesterday, the Federal Reserve made history by authorizing a third
consecutive 75-basis-point raise in an aggressive bid to combat the US
economy’s white-hot inflation.
The massive increase, unthinkable to markets just months ago, brings
the central bank’s benchmark lending rate to a new target range of
3% -3.25 %. THIS IS THE HIGHEST FED FUNDS RATE SINCE THE 2008 GLOBAL
FINANCIAL CRISIS.
The Fed’s decision on Wednesday is the Fed’s most significant
policy measure to combat inflation since the 1980s. It would also
certainly inflict economic hardship for millions of American companies
and people by increasing the cost of borrowing items such as houses,
vehicles, and credit cards.
Powell said as much yesterday: “We’ve probably in the housing
market got to go through a correction to get back” to
“reasonable” prices.
Powell went on to say that home prices and rent would remain elevated.
These are not exactly words of encouragement, especially when they
come from the man whose job it is to ensure stable prices and maximum
employment.
TO RECAP, WE DON’T HAVE STABLE PRICES, AND POWELL IS ABOUT TO WRECK
THE STOCK MARKET, INCREASE UNEMPLOYMENT, AND REAL ESTATE TO SLOW
INFLATION. THIS WILL MOST LIKELY LEAD TO A DEPRESSION IN 2023.
KEY EVENTS & CALENDAR
* Tuesday, September 27 – Core Durable Goods Orders (MoM) (August)
* Wednesday, September 28 – Pending Home Sales (MoM) (August)
* Fed Talk (All Week!!!)
* Iran Protests
* Russia Ukraine War – Peace or Nukes?
According to our observations, every day this week will have at least
one central banker speech. If they begin to drive you, you should
avoid the media for a few days.
There will also be some key indicators in the United States, such as
Durable Goods Orders and Consumer Confidence (Tuesday) and PCE
inflation (Friday).
In Europe, the German business climate (Monday) will be released
before the first estimate of September inflation on Friday.
Twitter (TWTR) will depose Elon Musk, Intel (NASDAQ: INTC) will host
an important innovation event, Amazon (AMZN) will unveil new goods,
and Tesla (NASDAQ: TSLA) will hold its highly anticipated AI Day in
Palo Alto, California.
We are keeping an eye on the protests in Iran as it could lead to
affect the energy markets.
It appears Russia is setting up to ramp up more in the war against
Ukraine, but it may be a ploy to set up a stronger position for peace.
If Russia uses nukes as they have threatened, it will cause a huge
ripple in the markets. However, if some kind of peace agreement is
reached, expect energy prices to crash.
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