Bank of America Market Strategist Says ‘Summer Rally Is Over’ as Crypto and Stocks Slide Ahead of Fed Rate Hike This Week

Bank of America Market Strategist Says ‘Summer Rally Is Over’ as Crypto and Stocks Slide Ahead of Fed Rate Hike This Week

Digital currency markets, precious metals, and stocks dropped another leg down on Monday following the drop markets saw last Tuesday. Last week’s fall was one of the worst weeks in more than three months as market strategists believe a sizable Fed rate hike is coming this week. Bank of America’s analysts led by Savita Subramanian believes the U.S. Federal Reserve “has more work to do,” and an aggressive central bank may be “anathema for stocks that have benefited from low rates and disinflation.” Crypto, Precious Metals, Equities Show Volatility Ahead of Fed Rate Hike — Pseudonymous Analyst Plan B Says Bitcoin and the S&P 500 Are Correlated but Are ‘Completely Different Worlds’

A hawkish Fed may be like repellent or kryptonite to assets that profited from easier monetary policy and stimulus, Bank of America’s market strategists led by Savita Subramanian said in a note this past weekend. Global assets are having a rough start on Monday as all four major stock indexes on Wall Street started the day (9:30 a.m.) lower following a gruesome week of trading activity last week. By 3:00 p.m. (ET), benchmark stocks saw a slight rebound showcasing extreme market volatility and uncertainty.

Subramanian and his team predict the S&P 500 will lose another 8% this year, and he further stressed that the “summer rally is over.” On Monday, digital currency markets slid 1.61% in the last 24 hours, and the crypto economy is now just above the $900 billion mark at $933.17 billion. Bitcoin (BTC) has lost 1.67% and ethereum (ETH) shed 1.79% against the U.S. dollar during the past 24 hours.

Precious metals like gold and silver saw losses as well on Monday, as gold shed 0.12% and silver dipped by 0.74% against the greenback. Bitcoin markets have been extremely correlated with U.S. equities, but some BTC market analysts believe bitcoin is a very different animal.

“[Bitcoin] and S&P 500 are correlated,” the pseudonymous analyst Plan B tweeted on Monday. “However, in the same period that S&P increased from ~$1K to ~$4K, [bitcoin] jumped from ~$10 to ~$20K. 4x versus 2000x … completely different worlds. Short-term moves are noise, long term trends are the signal.” Chart shared by Plan B on September 19, 2022. Bank of America Market strategists: ‘The Fed Has More Work to Do’ — Greenback Jumps Higher, 10-Year Treasury Notes Tap an 11-Year High

In the meantime, economists and analysts suspect the U.S. Federal Reserve will raise the target federal funds rate by 75 basis points this week. Bank of America’s Subramanian detailed that “the Fed has more work to do” and lessons from more than four decades ago can tell us a lot about combating inflation.

“A hawkish Fed may be anathema for stocks that have benefited from low rates and disinflation (i.e. most of the S&P 500), but lessons from the ’70s tell us that premature easing could result in a fresh wave of inflation—and that market volatility in the short-run may be a smaller price to pay,” the Bank of America strategist’s note explains. Subramanian’s opinion follows the report Bank of America economists revealed in mid-July. If the Fed"s not careful something is going to break. pic.twitter.com/inTtO7CZaP

— Sven Henrich (@NorthmanTrader) September 16, 2022

At the time, the bank’s economists said it previously expected a “growth recession,” but the summer forecast suggested a “mild recession in the U.S. economy this year.” On Monday, market analyst Sven Henrich quoted Fed chair Jerome Powell’s statement during a press conference last June, when Powell said: “Clearly, today’s 75 basis point (bps) increase is an unusually large one, and I do not expect moves of this size to be common.” Henrich then mocked the Fed chair by noting the central bank is proceeding to execute the third 75bps rate hike in a row.

While nearly every asset class under the sun is showing a strong connection to inflationary pressures and the Fed’s monetary policy, the U.S. dollar has continued to skyrocket against other fiat currencies. The U.S. Dollar Currency Index (DYX) tapped 109.756 on Monday afternoon (ET) and the euro has met parity with the greenback once again. A single Japanese yen equals $0.0070 per yen, and 10-year U.S. Treasury notes tapped an 11-year high at 3.518% on September 19. Tags in this story 10-year T notes, 75 basis point, 75 basis points, 75bps, Bank of America, Bank of America economists, Bank of America strategist, Bearish, Bears, benchmark, Central Bank, Crypto, crypto assets, Dollar, DYX), economics, Fed, Global Assets, gold, Hiked Rate, jerome powell, Mild recession, Plan B, Precious Metals, Precious metals (PMs), Rate Hike, Recession, S&P 500, Savita Subramanian, silver, stocks, Sven Henrich, treasury notes

What do you think about the Bank of America market strategist’s opinion about an aggressive Fed and the S&P 500 shedding another 8% by the year’s end? Let us know what you think about this subject in the comments section below. Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. Argentine Inflation Skyrockets to Almost 80% YoY as Crypto Adoption Grows ECONOMICS | 11 hours ago Billionaire Jeff Gundlach Discusses When to Buy Crypto — Warns of Deflation Risk ECONOMICS | 2 days ago

Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleHuobi Global to List Inery Token on September 28th, 2022 Next articleWazirx Plans to Delist 3 Stablecoins, Leftover Balances Will Be Auto-Converted to BUSD Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItTony Hawk"s Latest NFTs to Come With Signed Physical Skateboards

Last December, the renowned professional skateboarder Tony Hawk released his “Last Trick” non-fungible token (NFT) collection via the NFT marketplace Autograph. Next week, Hawk will be auctioning the skateboards he used during his last tricks, and each of the NFTs ... read more.Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand" Argentinian Securities Regulator Launches Innovation Hub to Discuss Regulated Crypto Investments UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Digital Ruble ‘Much Needed,’ Russia’s Central Bank Says, Won’t Delay Testing