The Federal Reserve can stop the nation's stock market meltdown just by printing more money in yet another round of quantitative easing, Robert Wiedemer, co-author of "Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown," told Newsmax TV.
But it not a clear-cut case of whether the U.S. stock market is in a death spiral. The central bank's policy makers do have options to halt the erosion.
"Yes, we're melting down. No, I think the Fed can still save us if they want to and are willing to print a lot of money but until then it's going to be a little rough," he told "Newsmax Prime."
Investors have been jittery as stocks plunged this week and markets got off to their worst four-day start to a year and economists slashed fourth-quarter U.S. growth estimates amid a China-led rout that continued to engulf markets around the globe. The market is on pace for its worst week since August. The Standard & Poor's 500 index has fallen 4.8 percent this week and the Nasdaq is in a six-day skid.
"What's coming out of China is very telling. It's not just their stock market evolved which it has but it's reflecting the manufacturing issues they've had for a while reflecting its slower economy," he said. "Some real realities out there that's pushing this market down."
Watch Newsmax TV on DirectTV Ch. 349, DISH Ch. 223 and Verizon FiOS Ch. 115
. Get Newsmax TV on your cable system – Click Here Now
Meanwhile, China nudged the yuan higher Friday for the first time in nine days, while traders welcomed the country's decision to suspend a circuit breaker that halted trading twice this week.
And Wiedemer says the investing adage that if "China catches the flu, and America begins to sneeze" is absolutely accurate.
China will remain in the spotlight in the coming week, with data that may help gauge how sharply growth is slowing in the world's second-largest economy.
The tremors set off by the 1 percent slide in China's yuan, from a hammering of Shanghai stocks to oil's slide to a 12-year low and Wall Street's weakest start to a year since 2001, echoed the China-triggered turbulence of last August.
Back then Beijing's 2 percent devaluation of the yuan in the midst of an emerging market and commodity rout led to Wall Street's biggest one-day drop in four years. Both episodes show the depth of concern about the strength of the Chinese economy.
"They're basically our biggest trading partner now. They're the world's biggest trading partner and of course, most importantly, they've really been driving a lot of the real growth in the world since the financial crisis," he explained. "It's really been China's game."
A raft of Chinese data in the coming weeks, starting with export and import figures on Wednesday, is likely to show activity in the world's second-largest economy continuing to slow, Reuters
(Newsmax wire services contributed to this report).
© 2023 Newsmax Finance. All rights reserved.