Central banks are popping 'pandemic-inspired bubbles' in housing, crypto, SPACs and more, but 'much more probably needs to be done,' says Credit Suisse.
Global central banks already managed to “pop some of the pandemic-inspired bubbles” this year by tightening monetary policy, but investors may need to wait until 2024 for relief in the form of Federal Reserve interest rate cuts, say Credit Suisse economists.
The Swiss bank’s economics team pointed to housing, cryptocurrencies, special-purpose acquisition companies , or “blank-check” companies, as some of the areas where frothy conditions have already fizzled, but also warned investors that “much more probably needs to be done to make monetary conditions properly tight,” in their 2023 outlook.
The world’s largest digital coin, bitcoin BTCUSD , was down more than 60% on the year through Friday, according to CoinDesk. That compares with the S&P 500 index’s SPX near 17% tumble in the same stretch, the Dow Jones Industrial Average’s DJIA decline of about 7% and the Nasdaq Composite Index’s COMP skid of roughly 29%, according to FactSet.
In addition to housing and crypto, pain in SPACs has continued, with KKR Acquisition Holding KAHC this week becoming the latest to liquidate.
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