Dan Niles sees ‘a lot more downside’ in the U.S. equities


The Nasdaq Composite is struggling again.

It’s shed more than 5.0% in less than ten days and Satori Fund’s Dan Niles warns there’s still a lot more downside in the equity market.

Why is Niles bearish on the market?

The U.S. Fed has indicated plans of aggressively raising rates and shrinking balance sheet by $95 billion a month to capture inflation this year. The double tightening, Niles said on CNBC’s “TechCheck”, will weigh on the U.S. stocks.

Remember the Fed added $4.8 trillion of stimulus, the government gave us $5.5 trillion in stimulus since the start of the pandemic. That’s why the stock market has gone up over the last two years. But now, the same thing applies on the way back down.

Niles continue to see “technology” as the worst sector to be in at present.

Niles sees ‘at least’ 20% downside

Niles cites the slowdown in Europe, China being pushed back into a lockdown, the ongoing war in Ukraine, and a strong U.S. dollar as significant headwinds that will hit the market moving forward.

I think there’s a lot more downside. I said coming into this year that the market will be down at least 20%. Now, what I would say is that the ‘at least’ is definitely the case.

According to the money manager, recent warnings from the likes of Adobe, UiPath, and Restoration Hardware should make it clear what investors can expect from the earnings season starting next week.

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