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JPMorgan Chase is calling for a brutal and far from imaginable bear market for the s p 500. Jamie dimon says don't be surprised if the s p loses another 20 of its value marking a peak to trough decline of around 40 percent this drop can add even more pressure to our financial systems and stress out even more Pension funds and retirement accounts same as what's currently happening in the UK in a CNBC interview Jamie dimon called for an easy 20 tumble or an s p Target of 2900 a noticeable stock market collapse but one that is still far from the.com and Global financial crisis if his prediction were to come true this would take you all the way back to 2018 or when President Donald Trump's corporate tax cut took effect in other words investors would be left with nothing over four years a pretty long period in the stock market nobody knows where the stock market is going and much of it is dependent on the fed's policy Skeptics are beginning to argue that the FED has been too quick with the raising rates and to pause to assess the impact of current interest rate hikes to the economy is needed so we can avoid a deeper recession just to put these rate hikes into perspective if you bought a 700 000 home in 2021 your mortgage payment is the same as someone who is buying a four hundred thousand dollar home today housing affordability has hit its lowest level in decades making it even harder for new generations to buy real estate although prices have gone down they're still far from their 2020 levels for the past decades low interest rates have been great for all assets including the stock market housing market crypto and a lot of others fueled by an accommodative fed the days of easy money are way behind us let me put this whole crash into some historical context the average bear Market dropped since World War II has been around 34 percent so a 40 drop isn't too far away from the realm of possibility even after stocks have lost 15 trillion dollars in value the stock market is far from being a bargain today in September the S P 500 was still trading at 18 times earnings a multiple that is way above historical valuations basically if the stock market were to rebound today this bear Market would have been the most expensive since the 1950s now let's look at the other side let's say we get this 20 drop as Diamond predicts and the S P 500 bottoms at 2 900.
the earnings per share for 2023 are estimated at 238 dollars which implies a price to earnings ratio of 12.2 which is pretty cheap but this estimate would be in serious trouble if we head into a deeper session in 2023 Wall Street still hasn't factored in lower earnings into their S P 500 targets with earning seasons on the horizon kicked off by none other than JP Morgan analysts are going to be keeping a close eye on how companies are faring through these tough times Nike one of the first major companies to report showed its inventory levels shot up 44 the value of which sitting at a massive 9.7 billion retailers stockpiling may be bad news for the economy but you can probably expect some deep discounts during the holiday seasons now a lot of Skeptics are arguing that we are going to avoid a recession and somehow the FED will be able to engineer a soft Landing let me tell you why that is pretty unlikely and why I think we are currently in a recession aside from the gloomy macro Outlook the world is witnessing surging inflation an end to the fed's Easy Money printer an escalating war between Ukraine and Russia and to European energy crisis that is about to get much worse this winter with the FED engaged in its most aggressive monetary tightening in decades no one can say with high conviction where the economy is going to go but what we do know is that the surgeon dollar has added extra strain on global economies especially emerging ones since most of their debt is denominated in U.S dollars Also earlier this month the British pound fell to its lowest level against the dollar since 1985.
reaching around one dollar all this has resulted in a real risk for a breakdown in U.S treasuries treasury secretary Janet Yellen said we are worried about the loss of adequate liquidy in the market quick note the treasury debt outstanding has climbed to a crazy 7 trillion since the end of 2019. aside from all the Doom and Gloom you've probably been hearing from everyone there is some good news for the stock market in the short run we have a lot of stock market indicators showing some signs of the short-term bounce about to take place this is also coincidentally lining up with a midterm rally which historically has been really strong for stocks especially in November and December adding to that we currently have some very negative sentiment in the stock market this extreme negative sentiment has typically been followed by some sort of relief rally the day the FED either raises interest rates by lower than expected or decides to pause I expect the markets to have a field day same way the down collapsed a thousand points in one day I expect a similar rebound to the upside stocks are starving for some good news from the FED right now and any signs of easing inflation is definitely going to be welcome news to the markets but bigger picture we probably still have a lot of pain ahead there are too many macro in geopolitical unknowns to confidently say we have bottomed we probably have some more ways to go if you like this video and want to continue hearing about the latest stock market news please be sure to like follow And subscribe till then stay frosty
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