America's economy has been doing well, so what about the S&P500?

FXOpen

A very surprising but clear path has been trodden by the US economy over recent months.

Despite inflation having reached 40-year highs across the country, the US Dollar has been a stalwart currency and held its strength against a flagging Euro and an absolutely plummeting British Pound.

The focus within the currency trading markets has been on the Pound reaching a 20-year low, and on Citi's recent prediction that inflation in the United Kingdom could reach 18% by January.

Conversely, the US Dollar has not been faced with such apocalyptic predictions, and the economy is appearing to hold itself up well.

The stock markets, however, is where the moot point is. Yes, the Dollar is strong compared to some other Western major currencies, but whilst the British Pound languishes, the FTSE 100 is doing well.

So what about US stocks?

Some degree of concern has been voiced by leading economists regarding one of the United States' major indices, the S&P500, with an alarming prediction that it may decline by as much as 26% over the next year.

That is not a prediction to be taken lightly, as it amounts to a drop from today's 4,000 point value to 3,000 points!

British veteran investor Jeremy Grantham, who is co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, an investment management firm based in Boston, a Boston-based asset management firm.

Mr Grantham yesterday predicted that the S&P500 may well decline in value by as much as 26% over the next year, having stated that he is looking to take a stance against what he considers to be 'junk bonds' and the tech-heavy NASDAQ index.

Mr Grantham's words have been taken seriously, as he built much of his investing reputation over the course of his career by identifying speculative asset bubbles as they were unfolding.

He also avoided investing in Japanese equities and real estate in the late 1980s during the peak of the Japanese asset price bubble, and avoided technology stocks during the Internet bubble of the 1990s so he has been studying the performance of tech stocks for many decades.

Mr Grantham expects tech stocks to tumble and corporate defaults to soar when the superbubble bursts, sending tech stocks and junk bonds downward, and cites demographic issues and national agendas such as climate policy to be contributing factors.

It is of course only a prediction, but it's an alarming one at that.

Buy or sell shares with CFDs in some of the world's biggest publicly listed companies on FXOpen’s trading platform. Open your FXOpen account now or learn more about trading share CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Shares

AMZN Stock Analysis: 4 Reasons to Doubt the Bullish Outlook NVDA Stock Analysis: Reversal Pattern Forming on the Chart NVDA Stock Analysis: Will AI Put an End To Decreasing Share Price? Market Analysis: TSLA Share Price Soars 10% Apple in Trouble: Shares Fall More Than 3.5%

Latest articles

Financial Market News

Weekly Market Wrap With Gary Thomson: Inflation, EUR/USD, S&P 500, OIL

Get the latest scoop on the week's hottest headlines, all in one convenient video. Join Gary Thomson, the COO of FXOpen UK, as he breaks down the most significant news reports and shares his expert insights. Inflation Still Dogs the

Forex Analysis

Market Analysis: Dollar Falls from 10-month High

EUR/USDThe euro rose on Thursday as the dollar retreated since investors remained cautious ahead of key inflation figures due on Friday. Data on Thursday showed the US economy maintained fairly strong growth in Q2, with an unrevised annual rate

Indices

US 30 Analysis: Dow Jones Finds Support

September is likely to be the second month in a row that the Dow Jones (US 30) stock market index declined. The last time this happened was... also in September, a year ago. Important economic data was published yesterday: → According

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.