How Far Are We From The Next Stock Market Crash? Fed Funds Rate Has Peaked
At the end of every rate hike cycle, equity markets cheer very loudly by way of very strong rallies, because market participants tend to believe that the end of rate hikes would mean that cost of capital would not go up any more (and would in fact start going down very soon, as and when the Fed starts cutting interest rates). We have seen similar exuberance in equity markets in this cycle too, especially since the Fed ended its rate hikes in July 2023. As we know, equity markets around the world have rallied very strongly ever since.
However such exuberance, as equity market participants soon realize, tends to be borne out of completely misplaced expectations, because the real reason the Fed has to stop rate hikes is NOT because the Fed wants to make cost of capital cheaper for market participants! The real reason the Fed has to stop rate hikes more often than not is because by the end of every rate hike cycle, the real economy is in such a bad shape and demand slowdown so severe that the economy simply can’t take the impact of anymore rate hikes. And hence by the time the Fed is done hiking interest rates, historically it has always been seen that it is just a matter of time before the US economy slips into a recession, which in turn is invariably leads to fairly large drawdowns in equity markets, not just in the US but across most leading equity markets around the world (including here in India).
In our latest video, this is what I delve deeper into, as I try to explain as to why the end of rate hike cycle, far from being cheered, should in fact be treated as the inflection point from where the countdown to the next big stock market correction starts!
But this below video is NOT just about gloom and doom… in this video, I also explore what are some of the tangible indicators we should look out for in order to time our exit from equity markets before any large stock market crash starts!
Watch Full Video on YouTube: Fed Funds Rate Has Peaked - How Far Are We From The Next Market Crash? Stock Market Crash 2024
INTEREST RATES HAVE PEAKED FOR THIS CYCLE AND THAT CAN ONLY MEAN THAT THE COUNTDOWN TO THE NEXT BIG STOCK MARKET CORRECTION HAS BEEN SET IN MOTION!
Please do also go through one of my earlier videos available at the following URL, where I have discussed one more very important market indicator (balance in Fed’s RRP facility) that can potentially help time our exit from equity markets before the next big stock market crash with a high degree of precision.
