JP Morgan, one of the world’s leading investment banks, has predicted a major crash in the US stock market. The bank remains cautious on the S&P 500 Index, expecting a 20% drop. JP Morgan’s stock market doomsday prediction comes at a time when the BRICS are poised to eradicate the dollar and damage the US economy.
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According to JPMorgan, the BRICS nations have little power to slow the US economy, which will self-destruct. The bank noted that the market capitalization of the top 20 US stocks has surged more than 27% year-to-date (YTD). These stocks outperformed the S&P 500 Index, which has surged nearly 16% YTD. The top 20 US stocks also outperformed the Russell 2000 Index, which has risen just 1.73% YTD.
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BRICS: JP Morgan warns US stock market could crash 23%
JP Morgan predicts that a major correction in the top 20 US stocks could lead to a market crash. The firm warns that the S&P 500 index could crash to a low of 4,200, a massive drop of 23%. According to JP Morgan, if the US stock market falls by 23%, BRICS currencies will gain strength in the foreign exchange market.
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While the US stock market looks for ways to stop the crash, the BRICS could cause further damage by severing ties with the dollar. Read here to know which sectors in the US would be affected if the BRICS ditch the dollar in trade. JP Morgan’s bearish forecast for the US stock market is bullish for the BRICS who want to drag down the dollar.
A weaker US dollar would be a boon for the BRICS, who want to prioritize local currencies in trade. JP Morgan has already warned that the US dollar could weaken in the coming decades, and the BRICS could take full advantage of the decline.
