The runaway in various asset markets at the hands of the Federal Reserve may not be over, warned former Wall Streeter and current Galaxy Digital CEO Mike Novogratz.
As Novogratz said on Yahoo Finance Live (video above): “The bullish case is that markets start to collapse. We see many collapses, not necessarily just in cryptocurrencies, but in other parts of the world.”
Novogratz, who started his career at Goldman Sachs in 1989, has not ruled out the possibility that the S&P 500 will fall below the 3,300 level by the end of the year. The benchmark is currently hovering around 3,625.
“We are in global turmoil,” explains Novogratz. “It’s really hard to get your confidence back once it’s gone….I don’t feel like the stock market is at a low.”
Novogratz’s attention seems well placed.
The Dow Jones Industrial Average (^DJI), the S&P 500 (^GSPC), and the Nasdaq Composite (^IXIC) are up over the year as the Federal Reserve aggressively hikes rates to keep inflation in check. It’s still down in double digits.
Markets may not get much better until the end of the year as the strong dollar weighs on sentiment and businesses use the upcoming earnings season to warn about future economic growth and stubbornly high costs.
In the third quarter, Wall Street analysts saw S&P 500 companies’ EPS up 3% year-over-year, sales up 13%, and profit margins down 75 basis points, according to data compiled by Goldman Sachs. We expect it to be 11.8%. Just a few months ago, an analyst expected his EPS for S&P 500 companies to grow by 10% in the third quarter.
Goldman Sachs echoed Novogratz’s concerns in a new memo this week, saying the bank is “tactically” underweight equities over the next three months amid a host of macroeconomic risks. rice field.
“Potential escalation of geopolitical risks and weak growth/inflation mix keep equity drawdown risks rising – US CPI in September [Consumer Price Index] Goldman Sachs strategist Cecilia Mariotti writes: Fed price changes. In our view, investor expectations for a Fed turnaround have so far not been matched by a significant reset in initial rate volatility, which has continued to rise both in absolute terms and relative to equities. is especially true. “
Brian Sotzi general editor, Yahoo Finance anchorFollow Sozzi on Twitter @BrianSozzi and LinkedIn.
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