Tobias Adrian, the director of the International Monetary Fund for Monetary Markets and Capital, predicted that a change in investor sentiment might cause the American stock market to collapse by an additional 20%.
Adrian said in an interview with the American “CNBC” network, on the sidelines of the annual meetings of the year 2022 of the International Monetary Fund and the World Bank Group in Washington, that morale and risk returns have held “well” so far, which led to an “organized tightening”.
He stated it was “absolutely plausible” in response to a question regarding the senior players on Wall Street’s anticipation for a further 20% share fall.
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According to Adrian, JP Morgan CEO Jimmy Dimon was referring to the possibility of a change in morale, which is undoubtedly a result of economic activity.
He went on, “Now, for 20%, this is unquestionably feasible. Although it is not our primary focus, it is conceivable.
He said that although the International Monetary Fund does not have a particular number as part of its foundation line, it is among the ranges in which the markets are still under pressure, the economy is slowing down, and the financial conditions are still tight.
On Tuesday, the Fund published its expectations for the prospects for the global economy, as it was expected that global growth will slow down to 2. 7% next year, which is 0. 2 percent less than its expectations for the month of July.
In addition, a study by the IMF revealed that, in light of the market’s current slump, the company’s assessments were declining due to high interest rates and expectations for future profits.
It’s important to keep in mind that the record index has already dropped by roughly 25% from the start of the year, which is a sizable amount that indicates the market is “declining,” and a more pronounced downturn signals increased investor suffering and market unrest.
Source: CNBC.
The possibility of the American stock market collapsing is not discounted by the International Monetary Fund.
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