“This is an ugly market. What I think is going on here is there are two factors for the market to digest. One is inflation, which created the market to set up in certain ways. Then, growth starts evaporating. You can see it all over the place, in stuff like consumer discretionary stocks. You can see it in the forward-looking indicators,” says Pal.
Pal also adds, “The market has to deal with inflation plus [slowing] growth, and that means everyone’s hit the liquidate button. So everything’s getting liquidated. So this is the correlation of 1-star markets that I was warning about.”
He predicts that both inflation and growth will move lower simultaneously in the months ahead. As a result, growth stocks, gold, and crypto may ultimately stand to benefit.
Last week, Pal predicted that the U.S. economy would see a downfall. He said the country is approaching an inflection point where peak inflation fears will give way to lower inflation and fast decelerating growth.
I think the big surprise on the near term horizon is a collapse in economic growth in the US. The SPX is pricing ISM at 50... 1/ pic.twitter.com/u9vtBKwYgC— Raoul Pal (@RaoulGMI) April 24, 2022
He also said that the Nasdaq index appears to be on the verge of potentially making lower lows, and the downside in the stock market may threaten crypto prices in the coming months.
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