Bank of America announces "recession shock"

10 avril 2022

At present, the macroeconomic environment as we have known it almost no longer exists. It is degrading at an astounding rate. And according to the Bank of America (BofA), the worst is to be feared. The institution estimates that the American economy could well suffer a shock of recession very soon due to a restrictive monetary policy of the Federal Reserve. However, the situation is quite different with cryptocurrencies.

Cryptocurrencies remained safe and sound despite the crisis

Throughout the world, the financial market, seen as a whole, is subject to change due to the major geopolitical upheavals that characterize world news. But meanwhile, in the cryptocurrency market, major digital assets have remained largely unscathed.

As a result, business organizations and pundits are beginning to believe that digital assets are a more robust market than traditional asset classes. In particular, they compare these assets to stocks. Thus, cryptocurrencies seem to have the potential to support investors and give them the opportunity to generate income.

In a particularly difficult environment for people who only invest in traditional equities, things could get more complicated. It might be time to trust digital currencies. Indeed, according to an expert from the Bank of America (BofA), cash, commodities and cryptocurrencies could outperform stocks and bonds.

Tough times ahead for the U.S. economy

Michael Hartnett, the Bank of America's chief investment strategist gave his take on the current downturn in the macro picture. He spoke in a weekly research note for the organization's clients, as Reuters reported on April 8.

In this official note, he clarified what we had begun to sense: "The inflation shock is getting worse". He didn't mince his words. According to him, there is “a worsening inflation shock, a rate shock which is only just beginning and a recession shock which is coming”. In short, according to him, the deterioration of the macroeconomic situation could cause a shock of recession in the United States. This situation is all the more alarming since for four decades the FED had been trying to cool high inflation by tightening this policy.

The Bank of America (BofA) has announced that the days ahead could be particularly difficult for investors in traditional assets. Michael Hartnett, a banking professional, said “the inflation shock (is likely) to get worse.”