×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: stocks | market | rates | Federal Reserve

Telegraph's Lynn: Bear Market Coming, 'Forget a Rise in Interest Rates'

Telegraph's Lynn: Bear Market Coming, 'Forget a Rise in Interest Rates'

Wednesday, 26 August 2015 07:00 AM EDT

Whether it's now or later, the 6 ½-year bull market for U.S. stocks is headed for an end, says London Telegraph columnist Matthew Lynn. And what are the ramifications?

First, "we can forget a rise in interest rates," he writes. "The markets have already worked out that the talk of the Federal Reserve pushing rates up in September can now be safely ignored."

The Fed has kept short-term interest rates at a record low just above zero since December 2008. Fed officials have been saying for weeks that they will raise rates by year-end. And until the stock market dive began a week ago, many economists expected a move in September.

The S&P 500 index plunged 6.2 percent from Aug. 17 to Aug. 24 before rebounding 2.5 percent Tuesday to 1,940.

"Second, we will see more stimulus," Lynn says. He notes that the Fed funded the financial system with liquidity after the stock market crashes of 1987, 2000 and 2008-09. "Why would we expect it to be any different this time around?" Lynn asks.

Meanwhile, star investor Wilbur Ross, chairman of WL Ross, says the stock correction is in the sixth inning. "I don't think it's going to have a very serious downward direction from here," he told CNBC. "But I think there will be lots and lots of volatility around whatever is the midpoint."

The index stands 9 percent below its May record high.

China's woes have sparked much of the U.S. decline. The Shanghai Composite Stock index has plunged 22 percent in the last four sessions alone. Ross says he is still investing in China, but like others, he maintains that the 7 percent economic growth rate reported by the Chinese government is vastly overstated.

Weakness in electricity, natural gas, steel and cement consumption shows that the true growth rate is a lot closer to 5 percent, he says.

The U.S. economy won't suffer much from China's economic slowdown, as U.S. exports to the nation comprise less than 1 percent of our GDP, Ross says.

Still, our economy is only "limping out of recession," he said. U.S. growth totaled a mediocre 2.3 percent in the second quarter, and the Atlanta Federal Reserve's forecasting model puts growth at only 1.3 percent for the third quarter.

© 2023 Newsmax Finance. All rights reserved.


Headline
Whether it's now or later, the six-and-a-half-year bull market for U.S. stocks is headed for an end, says London Telegraph columnist Matthew Lynn.
stocks, market, rates, Federal Reserve
378
2015-00-26
Wednesday, 26 August 2015 07:00 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved