The primary indices of the US stock market – Dow Jones, NASDAQ, and S&P 500 – closed Tuesday with a not-too-big decrease. It cannot be read as an "advanced" reaction to the Fed meeting and the rate hike, given the dip was quite minor. Nevertheless, this may be the beginning of a new round of collapse, since today (nearly no one doubts this), the rate will be increased by 0.75 percent, at least. Recall that even an increase of 0.5 percent is considered a severe tightening of monetary policy. And 0.75 percent or 1.00 percent (this option also cannot be fully ignored) is an ultra-severe tightening. Thus, we feel that now is the time for new sales of American stocks and indices. In principle, even if the decrease does not begin immediately, we still expect a further fall in the stock market since today's dip is unlikely to be the last. The Fed considers the 2.5 percent rate neutral, although everyone understands very well that even it will not be enough to return inflation to 2 percent. Moreover, at this time, the consumer price index continues to expand gradually.
However, so much has already been stated about the proposal that all feasible choices are evaluated numerous times. We also want to remind you that the QT program has been in effect since July 1, which involves lowering the Fed's balance sheet by $ 50 billion per month. And starting September 1, the volume of this program will be doubled to $ 95 billion every month, and this component should also not be neglected. After all, in the last two years, the stock and cryptocurrency markets have been rising, not least because of the large financial infusions into the American economy. Now, these infusions will be removed.
Consequently, the money supply will decline. For example, bitcoin meets the start of the QT program at roughly $ 20,000 per coin with a high price of about $ 70,000. And do you remember we said that every "bullish" trend in "bitcoin" ends with a decline of 80-90 percent?
But back to "our sheep." The US stock market is likewise projected to continue plummeting and will lose roughly 20 percent further by the end of the year. In principle, it is pretty straightforward to calculate the price values to which the stock market may fall - you need to look at where it was before the outbreak. Since the Fed will not stop there, it is easy to infer that demand for stocks will continue to drop. Of course, it will not drop at the same rate as cryptocurrencies. Whatever the circumstances in the American economy and monetary policy, Apple shares cannot be worth 0. Therefore, the stock market has a lower limit of plummeting.
