The air blew out of the investment bubble in the US!
After the price craze of recent years, which intensified even during the koruna pandemic, investors are now faced with a hangover.
The most obvious reason for the collapse of the Wall Street stock market: Due to mega-inflation, the US Federal Reserve (“Fed”) has to unscrew the interest rate screw.
The main interest rate has just been raised by half a percentage point, the biggest jump since 2000. The head of the “Fed” Jerome Powell (69) announced that the purchase of bonds in the amount of USD 95 billion per month will ensure further financial liquidity and the markets will soon disappear.
In other words: the era of cheap money is coming to an end!
And investors are fleeing the stock exchanges where experts have been warning of a developing bubble for years.
Market turmoil is becoming a hot topic in America – and US President Joe Biden, 79, faces new political chaos.
The recent losses, especially in tech stocks, are glaring: the world’s biggest tech companies, once high on the stock exchanges, have lost a trillion dollars (€ 948.7 billion) in market capitalization in just three trading days.
The numbers are amazing
▶ ︎ Applethe most valuable company of all time, lost over $ 200 billion in market value.
︎ There was also a sharp drop of 70%. security values for the streaming market leader Netflix.
▶ ︎ Company “social media” Snap (- 50%) i Facebook (- 42%) buttoned up.
▶ ︎ Transport agent Above an electric car manufacturer has had to deal with a 47 percent loss in price Tesla from Elon Musk’s technology titans (50) 34 percent ($ 199 billion of market value disappeared).
Very nervous investors are flocking to the “old economy”: Shares of the soup maker Campbell, as well as food producers General Mills and JM Smucker, have held better than tech stocks lately, according to financial broadcaster CNBC.
All major US indices have gone deep red:
︎ With a downside of 22 percent from its last peak at the beginning of the year, the Nasdaq tech exchange is deeply in a so-called “bear market”. Analysts fear a further decline of 18 percent. until October.
︎ The broader “S&P 500” index has clearly entered the correction phase with a negative almost 15 percent this year. Bank of America analysts fear it may drop by as much as 28 percent.
︎ The poverty in the well-known “Dow Jones” index of the 30 largest American companies is similar.
The crypts are also in a hurry
The cryptocurrency market, which has been so fashionable lately, no longer offers investors an exit. The losses are painful again:
Bitcoin’s “key currency” has recently dropped to below $ 30,000 for a short time. From last November’s record high, the price has dropped 55 percent.
According to CNBC, 40 percent of investors are now “underwater”, so they are losing money. In the last few days alone, a market worth more than $ 300 billion has destroyed all cryptocurrencies. Perspectives according to the financial newspaper “Barron’s”: It should go further south.
The US is shaking before recession
Another reason for the shocks in the US stock market is the fear of a recession:
There is concern that the “Fed” Powell will not be able to walk the rope – and the economy will fight against galloping inflation with too drastic interest rate hikes (gasoline prices in the US have just hit a new record, although well below the European level at 1.09 euro per liter…) practically stalls.
And here, according to German commodity trader Torsten Maus, there are very clear signals: we are already seeing an inverted yield curve when long-term capital market interest rates are below the short-term ones: “In the past, this always preceded a recession,” he explains.
The US dollar has risen sharply recently, which in turn affects export-oriented firms: 20 firms with a market cap of more than $ 100 billion have described the “strong dollar” as a sales brake. It is also one of the reasons for the collapse of many companies.
Maus summarizes the top reasons for the stock sell-off:
︎ “Of course, the most important thing is to raise interest rates, which in the US may rise even to 3.5 percent.”
︎ On top of that, there would be a “liquidity brake” when central banks stopped buying bonds. Many of the previous “crown winners”, especially in the tech sector, now seem hopelessly overvalued after the pandemic has ended, while in the manufacturing sector – as reflected in “Dax” or “Dow Jones” – the expected recession is already valued at.
︎ In addition, according to the expert, there will also be problems with the global supply chain in these sectors, “especially due to the ongoing” Zero Covid “policy in China.
Of course, no one knows where the seabed might be – and most fear it is far out of sight.