From Nasdaq: 2024-11-18 22:18:43

The Fed and Chair Powell signal no rate cut in December due to inflation risks. A 50% drop in S&P 500 during 1972-1974 serves as a cautionary tale. The potential loss of over $20 trillion in market cap from a 50% index decline is alarming, especially for smaller companies like those in the Russell 2000.

Tariffs, deportations, and low taxes create a dangerous mix for inflation. Supply constraints and higher prices are expected. With more cash available from tax cuts, consumer spending could further fuel inflation. The Fed may have to increase interest rates significantly, leading to a shift from equities to safer investments like treasuries.

JPMorgan CEO warns of a $1 trillion annual interest payment on U.S. debt, a first in history. Higher rates could escalate interest payments, risking default. Commercial real estate and consumer loans face defaults, putting banks at risk. Market crashes are often triggered by loan defaults, and the current economic landscape is fragile.

In case of another recession, Trump’s inflationary policies could worsen the situation. Easing such policies may prevent a deep recession, but the timing is crucial. If not addressed promptly, the economy could face severe consequences. The impact on key stocks during past market crashes serves as a cautionary tale for investors.



Read more at Nasdaq: Inflation To Sink S&P 500: Brace For Impact?