Tobias Adrian, director of money and capital markets at the International Monetary Fund, said the U.S. stock market could see a shift in investor sentiment leading to a sharp drop of another 20%.
Adrian said in an interview CNBC USAOn the sidelines of the 2022 annual meetings of the International Monetary Fund and the World Bank Group in Washington, it was said that sentiment and risk returns have held “well” so far, leading to “orderly tightening.”
Asked about Wall Street’s main players expecting the stock to drop another 20%, he said it was “definitely possible”.
“I think JPMorgan CEO Jamie Dimon is signaling that sentiment could be changing as well, and that is of course related to economic activity,” Adrian added.
“Now, for 20 percent it’s definitely possible,” he said. “It’s not our baseline, but it’s possible.”
He explained that the IMF doesn’t have a specific figure for its baseline, but it was a case of financial conditions continuing to tighten, economic activity slowing and markets continuing to come under pressure.
On Tuesday, the IMF released its forecast for the global economic outlook, according to which global economic growth will slow to 2.7 percent next year, 0.2 percentage points below the July forecast.
This, and IMF research, showed that higher interest rates and future earnings expectations led to a downgrade in the company’s valuation in light of the current market downturn.
It is worth noting that the benchmark index has already fallen by about 25% since the beginning of the year, a large percentage that means the market is in a bearish state, and further sharp declines mean deepening investor pain and market turmoil. .
Source: CNBC USA