New York: Is the US economy slipping into a recessionary period and have the sanctions on Russia over the Ukraine war in the eastern Donbas region set to boomerang, bringing stocks down and the entire money market into a tailspin reversing the bullish trends to bearish ones.
Judging by analysis by various economic experts, billionaires, investors, players in the stock market, and even officials in the government, the economy is going into a tailspin and markets are set to plunge 40 per cent, a cause for concern as at least six out of 10 Americans put their savings in the stocks hoping to grow their earnings. But ‘Don’t Panic’ is the advice of players in the stock market.
Billionaire and big-time hedge fund investor Leon Cooperman said the US economy will go into a recession and stocks will fall much further. He told CNBC that the S&P 500 would fall 40 per cent in total from peak to trough. He said the index might not bounce back until it hits 3,000.
US stocks have a long way left to fall, says the hedge-fund veteran Cooperman, who has predicted the economy will tumble into a recession in 2023.
A total drop of 40 per cent is what he predicts as he feels recession has battered corporate profits. He said equities were unlikely to head back into a bull market anytime soon.
This is based on the trend that in recent times, investors have dumped stocks in 2022 as the Federal Reserve has embarked on what is likely to be one of the fastest interest-rate-hiking cycles in its history in an effort to tame rampant inflation. Even the crypto exchange is down by 86 per cent.
Cooperman founded the hedge fund Omega Advisors, which he now runs as a family office.
Traders whose fear of the Fed sent markets hurtling into bear territory on Monday are girding for a long dark night as stocks head for their longest slide in months.
Investors are keen to see whether the central bank gives any indication as to whether it will raise rates at a faster clip. Indications are it will as it’s the only option to rein inflation, claimed to be the worst in 40 years.
The US imposed sanctions on Russian companies and exports, including oil, over the Ukraine invasion. Biden officials now acknowledge that the sanctions affected the US economy. They’re now quietly encouraging some US firms to use Russian products to try to offset the damage, analysts claim.
Though the Biden administration predicted that the impact of those sanctions on the US would be minimal – if it could ensure they didn’t affect US food and energy security. However, rising energy and food costs in the US have become two of the main drivers of inflation, which hit a 40-year high this month.
US Treasury Secretary Janet Yellen privately believes the spike in prices is in part a result of what the outlet called unexpected “self-sanctioning,” referring to US companies’ abandoning Russia entirely to minimize the risk of violating US regulations. Yellen said she was “wrong” to say inflationary pressures would pass.