Chris Vermeulen warned that the US stock market will inevitably face a bear market and a difficult “reset.”
The Zhitong Finance App learned that Technical Traders Chief Investment Officer (CIO) Chris Vermeulen warned that the US stock market has been in a long-term bull market, but there are signs that it will eventually lose momentum, and then inevitably face a bear market and a difficult “reset.”
The investment director mentioned the recent rise in defensive assets such as precious metals, energy stocks, and industrial stocks. Vermeulen said these sectors usually perform well in the late stages of a bull market, and a bear market or “financial reset” is inevitable after a bull market.
He predicted that investors might enter another bear market, similar to the bear market after the internet bubble and the 2008 financial crisis. He warned that this could eventually cause investors painful stock losses, and people's wealth will shrink by up to 30%-50% over the next year.
“I think we're entering a major market top, more or less a financial reset,” Vermeulen said on Tuesday. “It's a short-term, temporary pain. But we need to reset the market. In order for the market to continue to rise, we need regular pullbacks and adjustments.”
Vermeulen said that this reset may also be accompanied by a recession, especially industrial stocks, which suggest a slowdown in the economy. Despite the industry's good performance in recent months, buyers of industrial products usually upgrade equipment at the end of the economic growth cycle due to “huge delays” between business slowing down and orders for new machines.
Speaking about the US company, Vermeulen said: “They didn't realize we were at the end of a growth cycle and the music was about to stop.” “Industrial stocks continued to rise strongly. They're hitting record highs, which is a sign that we'll see these companies finally start to slow down their growth.”
Investors are still worried about a potential recession, especially as inflation remains high and the Federal Reserve seems prepared to keep interest rates high for a longer period of time. According to the latest estimates from the New York Federal Reserve, there is a 58% chance that the US economy will fall into recession by next March.