Many experts predict hard times for the US stock market. Nevertheless, the best thing is to prepare for the coming difficulties. According to Bill Smead, the founder of Smead Capital Management, inflation in America will remain intact during the next decade, and the national debt will grow rapidly. At the same time, the head of Smead Capital believes the country's stock market will face tough times in terms of profits.
He supposes that such an unfavorable development of events could lead to the situation seen in the 1970s. Then, the rapid inflation growth in the US led to a sharp decline in profits, creating the so-called “dead zone” for the stock market. Against this background, the Federal Reserve sharply hiked the interest rate.
Bill Smead claims that the US stock market will face a similar situation in the next 10–15 years. The expert added that a “dead zone” in terms of yield is also awaiting it. Bill Smead believes that high inflation will persist and the profitability of the S&P 500 companies will drop. The analyst summarizes that this process will take several years.
Notably, in April 2024, consumer prices in America advanced by 3.4% year-on-year. This figure is still well above the Fed's long-term target of 2%.
