Wharton Professor Jeremy Siegel is warning that the Fed will spark a disaster if it delivers a bigger rate hike than expected after this week’s FOMC meeting. “We have to get no more than 25-basis-points,” he said. “50 would be, I think, a disaster.” Many experts, like Morgan Stanley’s Michael Wilson, are warning investors not to buy into recent stock market rallies, adding that more hard times are coming. Chris Vermeulen, founder and CIO of The Technical Traders, told Kitco News that he believes the S&P 500 is due for another significant crash. “I honestly think that the S&P 500 could fall another potential 37 percent, roughly, from current levels. That is enough to create a lot of damage, a lot of stress, lots of bankruptcies, you name it.” However, he said gold and silver are set to take off.
Business Insider/Jennifer Sor
Wharton professor Jeremy Siegel says the Fed risks sparking a disaster if it hikes rates higher than markets are expecting at its upcoming meeting
The Federal Reserve risks sparking an economic disaster if it hikes rates higher than markets are expecting at its upcoming meeting this week, according to Wharton Professor Jeremy Siegel.
In an interview with CNBC over the weekend, Siegel pointed to the Federal Open Market Committee meeting to take place from January 31-February 1, where Fed officials are expected to announce a 25 basis-point rate increase. Central bankers hiked rates 425-basis-points last year to bring down inflation, but the central bank needs to ease up on those efforts as it risks overdoing it and pushing the economy into a recession, critics say.
“We have to get no more than 25-basis-points. 50 would be I think a disaster,” Siegel warned.
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Kitco News/Cornelius Christian
Stock markets are set to crash 37% as ‘sucker’s rally’ ends, gold and silver to ‘take off’ – Chris Vermeulen
The S&P 500, which recently rallied 6.6 percent over the past three months, is due for a significant crash, 37 percent down from current levels. That is according to Chris Vermeulen, Founder and CIO of The Technical Traders.
“I honestly think that the S&P 500 could fall another potential 37 percent, roughly, from current levels,” he predicted. “That is enough to create a lot of damage, a lot of stress, lots of bankruptcies, you name it.”
However, he added that gold and silver are set to “take off” amid this otherwise bearish market.
You can read the full article here, here.
Bloomberg via Yahoo Finance/Farah Elbahrawy
Morgan Stanley Says Don’t Buy the Rally as Fed Looms
Investors flocking to the equity rally will be disappointed as they’re in direct defiance of the Federal Reserve, according to Morgan Stanley strategists.
“Better price action in stocks has started to convince many investors they are missing something — compelling them to participate more actively,” a team led by Michael Wilson wrote in a note. “We think the recent price action is more a reflection of the seasonal January effect and short covering after a tough end to December and a brutal year.”
In reality, earnings are worse than expected, especially on the margins front, they said. “Secondly, investors seem to have forgotten the cardinal rule of ‘Don’t Fight the Fed.’ Perhaps this week will serve as a reminder.”
You can read the full article here, here.
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