Investorideas.com

Call 800 665 0411 to learn about our services for your stock

Search   Follow Investorideas on Twitter   Investorideas is on Facebook   Investorideas is on Youtube   Investorideas is on Pinterest  Investorideas is on stocktwits   Investorideas is on tumblr   Investorideas is on LinkedIn   Investorideas Instagram   Investorideas Telegram   Investorideas Gettr   Investorideas RSS




Share on StockTwits

Calm before storm: Is a 10% market correction on the horizon?

 

April 26, 2023 (Investorideas.com Newswire) Investors should brace for a 10% market correction over the next few weeks, warns the CEO and founder of one of the world's largest independent financial advisory, asset management and fintech organizations.

The warning from deVere Group's Nigel Green comes as major central banks continue their battle to try and tame inflation and differing signals from stock and bond markets.

He says: "We expect the US Federal Reserve will raise interest rates once again at its upcoming May meeting; the Bank of England's chief economist has hinted at a further interest rate rise next month; and a half-point interest rate increase can't be ruled out for the European Central Bank's meeting next week according to Executive Board member Isabel Schnabel.

"This is likely to cause jitters in the market as some investors, concerned about short-term profits, will move into panic-selling mode.

"Furthermore, they will have legitimate concerns that further rate hikes now - when monetary policy time lags are notoriously long - could steer economies into a recession.

"The time lag in monetary policies is very high. Economists estimate interest rate changes take up to 18 months to have the full effect. This means monetary policymakers need to try and predict the state of the economy for up to 18 months ahead.

"With inflation seemingly having peaked, central banks are slowly winning the battle and officials now need to take their foot of the brake."

Stock markets are currently calm and enjoying a month-long rally. This suggests that confidence in the outlook for profits and dividends growth is returning. And yet core major bond markets continue to be marked by inverted yield curves, which suggest recession is ahead.

"We've seen solid gains on all the major stock markets, over the last month. Fear of a further crisis in the financial system has subsided, and investor risk appetite has returned," notes Nigel Green.

"In addition, stock market volatility has fallen, with the VIX index of implied volatility on the S&P500 at 17.8, near an 18-month low.

"Investors appear to be seeing beyond the current interest rate cycle, and its likely impact on company earnings, and looking ahead to the next upswing in the economic cycle."

He continues: "In contrast, the bond market is very much focused on the interest rate cycle, with yield curves inverted in the US, UK and Eurozone. Longer term lending rates are below the overnight rates set by central banks.

"This reflects fear that the final rounds of interest rate hikes, from the major central banks this spring and summer, may tip economies into recession.

"The IMF, never an organisation to be glass half full, recently supplied a number of arguments as to why recession might occur. They included reduced real wages (because of inflation), low investment spending, and the need for governments to repair their finances after Covid-era deficits."

The deVere group CEO goes on to add: "This huge disconnect between stocks and bonds suggests that investors should brace themselves for significant volatility in global financial markets over the next few weeks. We could see a 10% correction."

He concludes: "We expect that we're currently in the 'calm before the storm' phase.

"That said, a market correction is a natural part of the market cycle and can present major buying opportunities for long-term investors who are willing to weather short-term volatility."

e: george@priorconsultancy.co.uk
t: +44 207 1220 925
Twitter: @PriorConsults

deVere Group is one of the world's largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

More Info:


Investorideas.com Newswire

This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders


Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.

More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/

Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp


That's all it takes to get an article published on Investor Ideas - Learn More





Investorideas Potcasts is on Facebook Follow Investorideas Potcasts on Twitter Investorideas Potcasts is on Instagram Investorideas Potcasts is on LinkedIn Group