Forbes: S&P To Crash More Than 40%?

Monday, November 18, 2024

We believe Chair Powell's Fed sees inflation as a real risk - no - a massive threat due to possibility of persistent, sticky inflation - the kind that resulted in an almost 50% drop in S&P 500 from 1972 to 1974

Posted by Corky at 04:04 PM | 4 COMMENTS | permalink

How much will that hurt? Well, the combined market cap of S&P 500 constituents is roughly $45 trillion. So a 50% decline in the index would mean a loss of more than $20 trillion in value.

Comments

"To make matters worse, persistent inflation combined with high interest rates hurt smaller companies the most - magnifying the impact on the small caps index Russell 2000.

Why is that?

3 ingredients: 1. Tariffs. 2. Deportation. 3. Low Taxes (on billionaires, not you, buddy!)

In combination, this is a combustible mixture that'll make it difficult for the Fed to fight an inflation spike in coming months, and running into 2025 as the Trump presidency kicks off.

Of course, Trump might not implement policies around tariffs, deportations, and lower taxes that he promised. Or, let's hope they're not as severe as he's promised on the campaign trail.

But if he does, inflation will head north in a hurry.

The rules are simple. Higher tariffs will take cheaper goods out of the market. Prices will rise.

Mass deportations of illegal immigrants sounds reasonable - after all, they're illegal immigrants - except it'll make cheaper labor unavailable. On average, the price of services will go up."