The "zombie economy" is causing stock market concern, Canaccord Genuity's chief market strategist told Bloomberg. High interest rates have created "zombie" corporations by raising borrowing costs.
However, robust US economic growth has clouded the recession prediction and caused market volatility. The stock market is nervous. Zombie blame. Zombie companies—debt-ridden, unsustainable businesses. One strategist claims they've produced a "zombie economy" that's increased volatility as interest rates climb.
"We kind of still have the zombie economy," Canaccord Genuity chief market strategist Tony Dwyer told Bloomberg Wednesday. Fastest rate-hike cycle ever into a generationally levered system. Not great."
Higher loan expenses have revealed commercial real estate flaws. New York Bancorp's shares has dropped 31% in five days after an earnings report noting property loan issues. Investors are reminded of 2023 bank collapses.
Dwyer said that the economy is shaky. Strong GDP growth and sizzling jobs statistics indicate that the US economy is performing well despite borrowing prices being at a 10-year high. This uncertainty is affecting the stock market
"The problem that we have in the market, in this zombie-like economic environment, is that you're chasing a tail," stated. The commercial real estate catastrophe won't hurt the economy, says Dwyer, who has a simple remedy.
"What kills the zombie is you kill what created it: the fastest rate-hike cycle in history," stated. Dwyer added: "Medicate the economy, commercial real estate, government, everything, including the election. You need cheaper prices
The Fed is poised to turn, but Jerome Powell says a March rate decrease is improbable. CME FedWatch Tool traders now see a 55% likelihood the committee decreases rates by 25 basis points at its May meeting.
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