buffaloblitzmegaways| U.S. inflation may intensify in coming years, with high public debt levels

Transferred from: Jinshi Data

Bill Smead, founder and CEO of asset management firm Smead Capital Management and Buffett value investor, saidbuffaloblitzmegawaysAt least for the next 10 years, U.S. stocks will face a dismal return period.

The extremely pessimistic chief investment officer has been warning about the future direction of the stock market. In a recent letter to clients, he warned that continued inflation will severely affect the S & P 500's returns in years to come.

"We don't expect any return on the S & P 500 in the next 10 to 15 years and the era of inflation will continue," Smid said.

In a previous report, Smid compared the current macro environment to the 1970s, when soaring inflation and high interest rates sent stocks into a "dead ball" period. He wrote that a new era of inflation could lead to a similar period for stocks.

According to Smid, the "dead ball" period will last for at least a decade, and will only end when the market's enthusiasm for the most expensive stocks completely fades. In addition, the process could lead to losses similar to those seen during the dotcom bubble and financial crisis, when stocks fell by double digits.

As the Federal Reserve tightens monetary policy, U.S. inflation has cooled sharply from decades-high levels. Consumer prices rose by 3.3 percent year-on-year in Aprilbuffaloblitzmegaways.4%, but market commentators point out that this is still well above the Fed's long-term inflation target of 2%.

Smid said inflation is likely to intensify in the next few years because price increases are partly due to high public debt levels. The size of U.S. federal debt currently stands at approximately $34.5 trillion.

"For years, we have had huge fiscal deficits, and there are three ways to balance the budget: cut the budget, raise taxes, or use devalued dollars to pay off debt and ultimately get out of trouble through inflation." Smid said he later added that the first two options were unlikely to materialize due to political constraints.

Other extremely pessimistic forecasters warn that the future for U.S. stocks is full of bumps, especially as the United States still faces the possibility of slipping into recession within the next year. According to the latest forecast by economists at the New York Federal Reserve, the probability of a recession is 50% by April 2025.

Editor: Wang Xiaowei

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