Scott Minerd, global chief investment officer for financial firm Guggenheim, predicts that the stock market could drop 15% by November, according to a report by Business Insider. He blames the economic stimulus, noting that the central banks have “no exit plan.”
“For the time being, we’re just addicted to this,” he said earlier this week at the Milken Institute’s 2021 Global Conference. He explained that the central banks have lent $2.3 trillion in much-needed support for local businesses, households, financial markets and state and local governments during the pandemic. However, now the central banks are in the position of “running the markets,” he said, without a clear exit strategy to withdraw stimulus.
There’s also the concern of inflation, BusinessInsider.com writes. Michael Burry of The Big Short, along with investment experts Leon Cooperman and Carl Icahn have also warned against the Fed overstimulating the economy.
The Fed is likely to begin tapering bond purchases in December, according to BusinessInsider.com. A formal announcement may come at November’s Federal Open Markets Committee meeting.
Biden’s stimulus package has also been blamed for rapid inflation in 2021, with a tight labor market, an increase in demand for goods and services as lockdowns ended, and supply chain challenges creating “the perfect storm for inflation,” GOBankingRates reported last month.
The Dow Jones Industrial Average opened up slightly this morning, hovering just past the $35,550 mark, less than 100 points shy of its 52-week high. The market was bolstered by Apple, Tesla, and the new Bitcoin futures ETF.
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