The considerations made by Bob Michele from JPMorgan Chase concerning a technical parallelism with the 2008 crisis are worrying. What to expect from the S&P500 index?
Recently, there has been a growing sense of concern among a substantial number of investors that the current period of stability affecting the financial markets constitutes only a preliminary phase of a devastating storm, potentially capable of triggering a financial crisis of significant proportions.
Despite these concerns, the current economic outlook provides no indication of a contraction deep enough to cause financial damage of such magnitude. Therefore, the question naturally arises as to what reason drives some experts and analysts of financial institutions of prestige to express such concerns .
Bob Michele at JPMorgan Chase raises new concerns for traders
In recent times, concerns have arisen from Bob Michele, Chief Investment Officer of JPMorgan Chase. In his estimation, the current "pause" that financial markets are experiencing brings to mind the calm before the storm of 2008. Michele argues that this feeling of calm is deceptive. During an interview at the bank’s New York headquarters, Michele specifically referred to the period between March and June of 2008, when many financial operators had raised doubts about the stability of some banking institutions. After a long period of growth in the markets, traders mistakenly believed the concerns had been resolved.
Similarly, despite the several warnings that have been going on for over a year, the US economy still appears to have not suffered significant damage. As a result, many traders have downscaled their concerns, considering the possibility of a pause in the interest rate hike cycle. This prospect has fueled speculation and pushed the prices of many stocks to new highs.
However, according to Bob Michele, the worries were anticipated too soon. Based on interest rate hike cycles dating back to the 1980s, recessions have been observed to begin on average 13 months after the last rate hike by the Federal Reserve. Therefore, it was difficult to predict a recession right during the period of rising rates. This analysis reinforces his great confidence that, within a year, the US economy will effectively enter a recession.
S&P500: are we close to a reversal?
Looking at the situation from a chart point of view and looking for parallels with JPMorgan Chase’s considerations, it can be seen that the S&P 500 index may be in the vicinity of critical chart areas where the market may need to take significant decisions. On the weekly timeframe, it is approaching an overbought zone, which is a common signal indicating an area where profit taking by traders could increase, especially if growth prospects stopped for some reason. This graphic aspect arouses attention and raises questions about the possible future implications for the financial market.
{{}} Original article published on Money.it Italy 2023-06-25 07:47:00. Original title: La quiete prima della tempesta. Ci sarà una crisi come nel 2008?
