Stock prices in the U.S. could see a steep drop, according to a financial analyst, although they predict that a recession is unlikely to occur.
In a recent note, Vincent Deluard, head of global macro strategy at StoneX, has forecasted a "brutal but short" sell-off at the end of July or early August for the US stock market. This prediction comes amid concerns over US President Donald Trump's trade negotiations and the impact on foreign investors.
Deluard expresses apprehension among foreign investors about Trump's "trade escapades," the US deficit, and their exposure to the US economy. He highlights the key changes in the economy, including the transition from an industrial to a less volatile service economy, and the strong increase in government spending on healthcare and social programs for an aging population.
Despite the predicted sell-off, Deluard does not believe a recession will occur. He attributes the sell-off to US President Donald Trump's trade negotiations and notes that the sell-off will be short-lived. Overseas buyers are expected to be drawn to the stocks of Big Tech due to their dominant market position and central role in the AI revolution.
The housing market, on the other hand, is likely to remain weak due to "poor affordability, growing supply, and high and rigid mortgage rates." However, house prices will "cool but not crash" over the next two years, due to higher construction costs, rising incomes, and low unemployment.
Deluard also expects several sharp corrections in stocks over the next two years due to erratic political decisions, pressure from rising long-term bond yields, and foreign investor selling. He predicts that the Fed may need to raise its inflation target from two percent to up to four percent to support higher corporate profits and lower interest rates.
It is important to note that there are no publicly available search results detailing Vincent Deluard's specific predictions for US stock market corrections related to Trump's trade policies or other factors over the next two years. The provided sources mention his involvement with the CFA Society Miami and his insights on global markets, but do not include detailed forecasts or commentary on this topic.
In conclusion, while Deluard predicts a sharp but short correction in the US stock market, he does not anticipate a longer downturn or a recession. The housing market is expected to remain weak, but house prices will not crash. Deluard also suggests the Fed may need to raise its inflation target to support the economy.
Investors might face a challenging period due to Deluard's prediction of several sharp corrections in stocks over the next two years, which could be influenced by erratic political decisions, rising long-term bond yields, and foreign investor selling. In the realm of finance, Deluard proposes that the Federal Reserve might increase its inflation target from two percent to up to four percent to sustain higher corporate profits and lower interest rates.
