Thestock markethad a rocky ride in the first half of 2022, and investors aren’t likely to get a reprieve from volatility in the coming months. After rallying substantially in July S&P500 is still down approximately 18% and the NASDAQ is down 25, and from what we’ve seen in the news, it doesn’t appear like it’s getting any better anytime soon.
Renowned economists and fund managers are calling the July rally as dead cat bounce and trap for poor investors as economic situation is worsening. US GDP for last two quarters is negative and theire is no end in sight for Inflation and interest rate hikes.
Just recently, we witnessed that the annual inflation rate in the US has now touched 9.1 with a month-over-month gain of 1.3%. Where, FED generally aims for around 2% annual inflation. So, we already have eight months’ worth of inflation. If we dig deep, we find that the real cause of inflation is the rising energy prices, thanks to Russia’s invasion of Ukraine and how poorly the world has managed the situation thus far. Overall the energy prices rise to 7.5% in june as compare to 3.9% in May. If we further broke it down, we find that energy Commodities are up 10.4%, gasoline is up 11.2% and utility gas or piped gas up 8.22%.
Unsurprisingly, increased inflation leads to substantial interest rate rises. Now that Fed has raised interest rate by another 0.75 percent in July, some analysts are predicting a 1 percent jump. Unfortunately, interest rate increases is expected tocontinue until the fed’s 2-percent inflation target is reached. So, there might be a fewmore rate hikes in the coming months, but they will only make economic circumstances worse for citizens and companies. Consumers have less spare money as loan payments grow and life’s basics become more costly. For companies, this means reduced earnings as their debt repayments and other expenses rise. It already feels like a recession a trillion in market cap negative multiplier. For these reasons, many think a devastating recession is just around the horizon for America. Only Michael Barry was able to foresee all this way before. Currently, he is of the view that we’re only halfway there.
I’ve made a few Michael Barry videos lately in which I have talked about expcted market crash and inflation. So, in this video I will focus on why Burry thinks we’re only halfway there, despite the disaster we are already facing.
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