A leading hedge fund manager Lukasz Tomicki has warned that the S&P 500 index could crash anywhere between 20% to 30% next. Tomicki expressed concerns that inflation in the U.S. is not being taken seriously by lawmakers which could result in a sharp market correction.
Also Read: 10 ASEAN Countries To Ditch the U.S. Dollar
The S&P 500 index currently stands at the 5,304 level and is up nearly 12% year-to-date. It hit a high of 5,341 this year and cooled down after the CPI data where inflation stood at 3.2%. However, despite inflation, stocks have rallied high this year generating massive profits for investors.
The hedge fund manager explained that stocks hitting new highs could reverse course in the second half of 2024. The sell-off and profit-bookings from institutional funds could be high making average investors lose out on a lot of money. Therefore, the S&P 500 is in the overbought stage and a crash is on the horizon, predicted Tomicki.
Also Read: US Dollar: Analyst Calls De-Dollarization a ‘Bad Joke’
S&P 500 Could Crash 20% To 30%, Says Hedge Fund Manager
Tomicki pointed out that inflation in the U.S. has not been below the 2% for more than three years. Despite multiple attempts from the Federal Reserve to revive the economy, inflation has not gone down below 2%. “We had this big rally earlier this week on Wednesday based on an inflation that, if it was two years ago, I think would send the market down 3%. And now, somehow, everyone thinks this is a great inflation print,” he said to the Business Insider.
Also Read: Nancy Pelosi Makes $10 Million in Just 22 Days in May
“The market could easily go down 20-30% from here,” he warned citing that S&P 500 will be the first hit. If his prediction is accurate, then the S&P 500 index could fall between 4,240 and 3,710 price range. That’s a steep fall and could send not only the U.S. but the global stock market in a tizzy.