Following Jerome Powell’s hawkish commentary at the annual Jackson Hole Economic Symposium, major stock indexes, cryptocurrencies, and precious metals slid significantly in value. Over $240 billion was erased from the crypto market and the Crypto Fear and Greed Index continues to slide lower, edging toward “extreme fear.” Furthermore, the chief strategist at bubbatrading.com, Todd ‘Bubba’ Horwitz, explains that the Federal Reserve raising rates during a recession will wreak havoc on what’s left of America’s middle class.
Stocks and Cryptos Hurt by Fed Chair’s Hawkish Statements – Bitcoin Markets Continue to Show a Strong Correlation With 3 Major Benchmarks
Federal Reserve Chairman Jerome Powell explained that it will take “some time” for the US economy and current price volatility to recover, with the central bank chief saying “some pain” will be felt from the Fed’s tough policy. Following Powell’s statements in Wyoming, Wall Street trembled and all three major benchmarks (S&P 500, Dow Jones, and Nasdaq Composite) were down more than 3% at the closing bell on Friday. The Nasdaq was the biggest loser on Friday, down 3.94% as it posted its worst loss since mid-June.
The S&P 500 dove by 3.37% closing the day at 4,057.66 points and the Dow Jones Industrial Average shed more than 1,000 points or approximately 3.03%. The world’s top two precious metals, gold (Au) and silver (Au), lost between 1.13% (Au) to 1.79% (Au) to start the weekend. Platinum (Pt) slid by 2.38% and palladium (Pd) dipped 1.49% lower against the U.S. dollar.
The cryptocurrency market did not behave well with the Fed Chair’s comments as the crypto economy fell 6% on Friday and 4% on Saturday afternoon (EST). During Saturday afternoon trading session (EST), the leading crypto asset bitcoin fell below the $20K per unit zone for the first time since mid-July. On August 19, Bitcoin.com News reported the CFGI rating on the Crypto Fear and Greed Index (CFGI) falling to a score of 33 after rising to a score of 33 on August 14.
The CFGI score today is even lower than the 33 recorded nine days ago, as the current CFGI score is a 28 or “fear.” Similarly, the Cboe Volatility Index (VIX) saw a 3.78 point rise following Powell’s ten-minute speech. Nasdaq volatility has shown similar fluctuations as the VIX volatility gauge. Research shows cryptocurrency and bitcoin markets have been more correlated with equities markets than ever before.
Arcane Research highlighted the correlation in May 2022 when researchers noted: “Bitcoin’s correlation with the S&P 500 also continues to move upwards, currently sitting at 0.59, which is close to an all-time high.” Bitcoin (BTC) is down 71% from its all-time high (ATH) printed on November 10, 2021, and Ethereum (ETH) is down 69.6%. BTC is down more than 80% from its ATH during the last three bear cycles, and ETH is down 90% against the US Dollar.
Market Strategist Expects to See a 50 to 60 Percent Haircut in Equities Markets
Making matters less desirable, a number of strategists, analysts, and investors believe global markets are only going to get worse. The chief strategist at bubbatrading.com, Todd ‘Bubba’ Horwitz, told Kitco’s David Lin during a recent interview that stock markets could fall another 50% from here. Horwitz attributed his forecast to the Fed hiking rates amid what many believe to be a recession.
Horwitz further said that the financial moves may be linked to the controversial Great Reset. ,[The U.S. central bank is raising rates during a recession,” Horwitz said to Lin. “It’s never been done in history … There is a political agenda behind all of this stuff that’s going on, which is to try to create the Great Reset.” Horwitz further stressed:
[Biden’s] administration is looking to get the Great Reset. There is going to be no middle class left.
Horwitz also spoke about Powell’s remarks at the Jackson Hole symposium in Wyoming. The market strategist said: “[Powell’s] The comments are of an idiot,” highlighting that at last year’s symposium, Powell said inflation was transient.
“[Jerome Powell] is trying to get away from what’s going to happen, which is going to be hyperinflation,” Horwitz opined. “Wait until the price of oil starts skyrocketing again. What do you think is going to happen to inflation then? We’re going to have a food shortage this year. We’re going to have food riots in many countries,” the strategist added.
The bubbatrading.com analyst concluded that equities would suffer, but there could still be some opportunistic value in the commodity markets. “Overall, I expect 50 to 60 percent of my haircuts in these [equities] market,” Horwitz said. “If one looks at their own finances, they can certainly see that it is a time of recession and they are watching their spending.”
