Global investment bank JP Morgan has predicted a major crash in the US stock market. The bank remains cautious on the S&P 500, noting that a 20% drop is possible.
JP Morgan’s stock market doomsday prediction comes as BRICS seeks to uproot the dollar and damage the US economy.
The US economy will self-destruct without the BRICS having many factors that can drag it down, according to JP Morgan. The bank notes that the 20 largest US stocks have gained more than 27% in value year-to-date (YTD). These stocks have outperformed the S&P 500, which is up just under 16% YTD. The top 20 US stocks have also outperformed the Russell 2000, which is up just 1.73% YTD.
US stock market could crash 23%, JP Morgan warns
JP Morgan has forecast that one big correction could hit the top 20 US stocks, sending markets reeling. It warned that the S&P 500 could fall as low as 4,200, a sharp 23% drop. If the US stock market falls 23%, according to JP Morgan, BRICS currencies would gain strength in the foreign exchange market.
While US stock markets will seek to avert a collapse, BRICS could cause further damage by cutting ties with the dollar. JP Morgan’s bearish forecast for the US stock market is a positive signal for BRICS because the country wants to pull the dollar down.
The weakening of the US dollar is a boon for BRICS, which wants to push local currencies forward in trade. JP Morgan has warned that the US dollar could fall over the next few decades and BRICS could take full advantage of this decline.
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