Despite the fact that demand for US stocks is more buoyant compared to EU or Asian ones, Wall Street investors should be bracing for hard times.
The main reason for the impending collapse is the ineffective strategy of the Fed in the fight against inflation. Many analysts reckon that the incompetence of the regulator has resulted in higher key rates. They also point out that the Fed is still unable to mitigate the consequences of the coronavirus crisis. Notably, the central banks of some countries coped with this problem a long time ago. "Since the pandemic, even the most troubled companies had access to credit. So-called leveraged deal-making exploded. M&A often leaned heavily on borrowing because the Fed provided so much easy money the banks were virtually giving loans away," New York Post wrote in a post. It appears what goes up ultimately comes down on Wall Street.
"A cruel winter is likely for Wall Street as markets remain choppy and their biggest clients scale back. Traditional deal-making such as IPOs has dropped significantly. At every major investment house, management is quietly planning layoffs."