Will money start coming back to emerging markets amid US economic woes?Hugh Johnson answers
«I think it is really telling you, number one, there is a risk of a recession. I think it is premature to say that, but nevertheless there is a risk of a recession and in response to that risk, the Federal Reserve will reduce interest rates three times in 2024 and let us not forget there is the expectation that after reducing interest rates three times in 2024, the expectation is they will reduce interest rates four times in 2025 or one time each quarter,» says Hugh Johnson, Hugh Johnson Economics.
What has changed so suddenly that the markets are now worried about growth, crisis, yen carry trade, just about everything has come together?
Hugh Johnson: Well, I think, there always has to be some news of some sort that sort of touches off the correction and I think quite frankly the market had been a good market for a long time and it reached levels were a little bit pricier or overvalued, which made them very vulnerable to some bad news.
And, of course, we got that bad news when we got the very poor increase in non-farm payroll employment, very soft numbers when we saw those numbers on Friday and very importantly, obviously, an increase in the unemployment rate which was not expected.
The increase to 4.3% was not expected. So, what we had was a very sharp decline in stock prices, probably long overdue and, of course, a very big increase in bond prices and decline in interest rates and when you look really carefully at the numbers, you see that the markets, both the stock market and the bond market together, seem to
