January's CPI suggests the stock market is far from the bottom and we're set to see a repeat of the 2001 market crash, says a top-ranked stock picker. He shares 3 investment options that are risk-free or set to outperform.
The central bank will need to be much more aggressive in 2023 if it wants to tame inflation. Consumer-Price IndexInflation has proved to be stickier than the central bank expected, said Gordon Johnson, the CEO and founder of GLJ Research, an independent firm. What's also not helping isby beginning the year signaling a 25-basis-point interest rate hike rather than 50 bps, he said.
Johnson, who has been ranked by Bloomberg among the top stock pickers in the steel, iron ore, graphite electrode, electric vehicle, and solar spaces, says the Federal Reserve isn't doing enough to tame inflation and markets have responded to this by pricing in a dovish pivot. But Johnson believes central bank policies will further impact the stock market heading into the rest of the year.
He believes the stock market will repeat the pattern witnessed in 2000 and 2001. In 2000, the Nasdaq was down 39%. By January 2001, the Nasdaq recovered 12%. In 2022, the index plunged by 33%. Similarly, year-to-date, the index has recovered by 15.26%. However, like 2001, when the index fell by about 20%, 2023 will see a similar decline, he said.
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