In the previous articles, we concluded that it is quite probable that the US stock market will continue to collapse. Numerous experts have reached this conclusion, given that the Federal Reserve will continue to tighten monetary policy in all available ways. The QT (quantitative tightening) program has already begun, under which 50 to 95 billion dollars will be taken from the economy each month. In other words, we observe the exact reverse of what was observed during the pandemic. The Fed injected $ 120 billion into the economy every month, out of thin air, as rates fell to zero. Let's delve further to see if the departure of surplus money from the US economy will harm the stock market. From our perspective, no. In recent years and even decades, it has been believed that when the market falls, it is always negative, characterized by panic, and always undesirable. The new "black" days are Thursdays, Mondays, Tuesdays, and Fridays. In addition, each time the stock market falls, economists sound the alarm. Why didn't anyone voice the warning when the stock market was rising? After all, they were well aware that it was expanding because there was more money in the economy, and they had no choice but to settle elsewhere. Therefore, they invested in cryptocurrencies and the stock market. Now we are observing the opposite process, which reveals that everything returns to its initial placements. We recall that Bitcoin's growth began at $ 4,000 per coin. It will probably return within the next two years. In February 2020, the NASDAQ index was at 9670; following six months of decline, it is presently at 11877. In February 2020, the S&P 500 index was at 3391 and is now at 3829.
What enables us to comprehend this fact? Initially, the fact that key US indexes are approaching their pre-crisis levels. Second, the decline will persist. Now let's examine how long the fall will last in further detail. If it is commonplace to consider the levels of the indices before the outbreak, it turns out that they will decline quickly. However, it should be noted that the Fed's interest rates were not as high before the pandemic as they may be by the end of 2022. Therefore, we anticipate a decline to values lower than those reported in February 2020. In addition, stock indices may go even lower, but many markets will begin to rebound after the Fed stops raising interest rates. When will the Fed stop increasing the interest rate? When will inflation begin to exhibit a minimum deceleration?