Stocks Turn South Ring The Church Bells Loud Warning

Clifford Bennett, Chief Economist at ACY

01.04.2022 01:15 pm

#stocks

European and US equities decidedly turned south yesterday, and this could be significant.

It is always game to read too much into a couple of days trading, but with the fundamental outlook globally, particularly for Europe, being so incredibly bleak, some might say plain ugly, any rollover after a high buy-back driven rally is a very serious cause for focus.

The short list: EU recession, US recession, China sustained slow-down, extreme inflation, some food and energy scarcity, and a Federal Reserve just starting to panic rates higher. The war is not over.

This is the absolute worst fundamental economic construct the world has faced in out life times.

This is a much more severe matrix storm of economic fundamentals than even the Global Financial Crisis.

It is entirely reasonable to expect a global economic slowing more severe than was experienced during the Global Financial Crisis.

This is "as bad as it gets" fundamentally.

Meanwhile, US companies in particular have been manipulating their stock prices higher through share buy-backs. This only works to amplify the inevitable following market decline. As I said yesterday, shifting us from “correction” risk, into the realms of possibility of some form of market “collapse”. Short term manipulations of the stock market to the upside have never ended well.

As a result the US and European stock markets can easily fall a further 20% from their current levels over the course of this year.

That places the SP500 at just 3,600, the Dow Jones at 28,500, and the NASDAQ as low as 11,500.

The Australian market is not immune and could fall back to ASX200 6200.

These are big figures, but what is occurring in the world today fundamentally, predominantly in the West is as bad as it gets. Market can only look the other way for so long before the fundamental gravity begins to drag them under.

There is an energy panic already occurring in the world as the US releases its strategic reserves and Germany enacts an emergency gas rationing plan. The food crisis is coming.

Consumers will continue to retrench. 1+1 = 2. Recessions across Europe and even the USA, and permanent slowing of China are what we will definitely experience.

It’s not rocket science.

It is plain economic in your face reality.

Wake up markets. Investors protect yourselves.

In my 35 year career, this is the worst economic construct I have ever seen.

Clifford Bennett

ACY Securities Chief Economist.

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Clifford Bennett
ACY Securities Chief Economist.

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.