Investors are bracing for a 10% market correction over the next month as they struggle to get a sense of the Federal Reserve’s thinking on interest rates, said Nigel Green, CEO of deVere Group.
The lead executive and founder of one of the world’s largest independent monetary advisory, asset control and financial technology organizations comes forward as the Federal Reserve is expected to announce widely on Wednesday that it will begin undoing its $120 billion per month bond purchases.
Green: “While Fed Chairman Jay Powell will communicate about cutting the bond-buying program, the real story for markets is how the Fed, the world’s de facto central bank, will communicate about inflation.
“Inflation is getting higher and higher and fits into a bigger challenge than top analysts had anticipated in the past.
“As such, investors will see how the Fed intends to combat the upward trend in costs by starting to raise interest rates. “
He continues: “It is highly unlikely that the central bank will now use its old term ‘transient’ to describe existing value peaks. Inflation turns out to be more inflexible than they had anticipated.
“This means they will have to raise interest rates faster and/or more aggressively.
“As a result, markets are actively forecasting two or 3 hikes next year, which may lead to a market adjustment of 5-10% over the next month. “
By its nature, all markets are prone to bouts of volatility, how to fix it?It is almost universally identified that a well-diversified portfolio and a smart fund manager will help investors take advantage of the opportunities presented through volatility and avoid potential dangers as they arise.
DeVere’s CEO concludes, “The central banks that last year initiated a massive emergency to combat the pandemic are now making plans to change direction.
“A market correction will be noticed through sly investors as the first major step towards a return to general financial policy and will likely look for the inherent opportunities that arise. “
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About the deVere Group
deVere Group is one of the world’s largest independent advisors for specialized global monetary responses for international, prosperous local and leading network clients. It has a network of more than 70 offices worldwide, more than 80,000 clients and 12,000 million dollars in consulting.