Stocks, precious metals, and cryptocurrencies rallied in the first month of the year, and market strategists say markets could retreat in the near future if the US Federal Reserve continues to raise rates and maintain a broader tightening policy They stated that three days later, on February 1, 2023, the Federal Open Market Committee (FOMC) is scheduled to meet. While the market is expecting a rate cut, some analysts believe the Fed will continue to raise the Federal Funds Rate Chris Vermeulen, founder and chief investment officer of The Technical Traders, argues that the S&P500 will fall 37% The P 500 is slated to slide 37% lower than its current position.
Strategists predict a possible market correction
as Powell is expected to tighten monetary conditions again.
The market is closely watching the next Federal Open Market Committee (FOMC) meeting, scheduled for Wednesday, February 1, three days from now. Last week, Bitcoin.com News reported how investors are closely watching the decisions of the 16th Federal Reserve Chairman Jerome Powell, and as the FOMC meeting approaches, there is widespread discussion on social media about the outcome.
A market strategistcalled “Carter” explained on January 27 that “there will be blood on the streets on February 1,”referring to the potential turmoil the market could face after Powell’s speech. While some investors are expecting a dovish Fed and a possible rate cut, Carter insists that Powell will instead continue with tightening and restrictive policies.
Analystspoint outthat Powell has previously referred to a “broader tightening project” in three stages: rapid hikes to reach neutral rates, cautious hikes to reach “sufficiently restrictive” rates, and staying at terminal rates for a while. Federal Reserve Chairman Jerome Powell will retighten monetary conditions by tackling rate cuts head-on and forcefully,” Carter emphasized in a Twitter thread.
The strategist expects the Fed chairman to address this theme forcefully on February 1, shifting the conversation toward how long the Fed will need to hold the closing rate and why.” “I expect him to expand on the lessons of the 1970s,” Carterwrote. He added, “Under the circumstances, I don’t understand why the market keeps punching Powell in the face and not expecting a counterpunch. This is the craziest market setup here right now, and there will be blood on the streets come February 1.”
Experts Predict 37% Drop in S&P500, While Gold and Silver Set to Shine in Bearish Market
David Lin, anchor and producer at Kitco News, said. Chris Vermeulen, founder and chief investment officer ofThe Technical Traders, saidstocks are in an adjustment phase.
“Frankly S In this situation,” Vermeulen told Lin, “the S.P. 500 could fall roughly 37% from its current level. S Such a case would be enough to create a lot of damage, a lot of stress, a lot of bankruptcies, all kinds of things.” In contrast, Vermeulen expects gold and silver to shine through the bear market. This is the time for precious metals and miners to take off,” Vermeulen asserted while discussing the market cycle.”
Vermeulen is not the only investor who thinks gold and silver will take off; in December 2022, Eric Strand, manager of the AuAg ESG Gold Mining ETF, said gold will hit an all-time high in 2023 and that the Fed and other central banks will pivot to raising interest rates, he said.
“It is our opinion that central banks will pivot and dove on raising interest rates during 2023, which will ignite an explosive move in gold for years to come,” Strand said.” Therefore, we believe gold will finish at least 20% higher in 2023 and also see miners outperform gold by a factor of 2.”
While gold is rising and expectations are high for 2023, Harry Dent, founder of HS Dent Investment Management, has a paradoxical view of gold’s performance this year. Dent predicts that the yellow precious metal could lose $900 to $1,000 over the next 18 months.
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