Stock market: what is being prepared in the USA? – Deal

Pffff …

The air is out of the US investment bubble!

After the price frenzy of recent years, which even escalated during the corona pandemic, the hangover is coming for investors.

The most obvious reason for the stock market carnage on Wall Street: Due to mega-inflation, the US Federal Reserve (“Fed”) has to lower the interest rate screw.

The benchmark rate has just been raised by half a percentage point, the largest leap since 2000. “Fed” boss Jerome Powell (69) announced that bond purchases worth $ 95 billion a month would provide additional. liquidity at the markets would soon be disrupted.

In other words: the era of cheap money is coming to an end!

And investors are fleeing equity markets, where experts have been warning of a developing bubble for years.

Market turbulence is becoming a hot topic in America and US President Joe Biden (79) is facing new political chaos.

The latest losses, especially in tech stocks, are resounding: the largest tech companies in the world, once the most coveted of the stock exchanges, have lost a trillion dollars (948.7 billion euros) of market capitalization in just three days negotiation.

The numbers are great

▶ ︎ Applethe most valuable company of all time has lost over $ 200 billion in market value.

︎ There was also a steep 70 percent drop in security values ​​for the streaming market leader Netflix.

▶ ︎ The “social media” company. Hurried (- 50%) e Facebook (- 42%) connected.

▶ ︎ The transport agent Uber had to accept a 47 percent price loss, the electric car maker Tesla from tech titans Elon Musk (50) 34 percent ($ 199 billion in market value was gone).

Very nervous investors are fleeing to the “old economy”: shares of soup maker Campbell, as well as those of food producers General Mills and JM Smucker, have held up better than tech stocks recently, according to financial broadcaster CNBC.

All major US indices have slipped into the deep red:

︎ With less than 22 percent since the last high of the beginning of the year, the Nasdaq technology exchange is immersed in a so-called “bear market”. Analysts fear a further 18 percent decline through October.

︎ The broader “S&P 500” index has clearly slipped into a correction phase with less than nearly 15 percent this year. Bank of America analysts fear it may even decline by another 28%.

︎ The misery in the well-known “Dow Jones” index of the 30 largest US companies is similar.

Cryptocurrencies are also running away

The cryptocurrency market, which has been so trendy lately, no longer offers investors a way out. Again, leaks are painful:

The value of the “key currency” Bitcoin recently dropped below the $ 30,000 mark for a short time. From an all-time high last November, the price has fallen by 55%.

40 percent of investors are now “underwater,” according to CNBC, so they are taking losses. In the last few days alone, more than $ 300 billion worth of cryptocurrency has been destroyed on the market. The outlook according to the financial newspaper “Barron’s”: it should go further south.

The US is shaking before the recession

Another reason for the stock market tremors in the US is the fear of a recession:

There are fears that the “Fed” Powell will not be able to walk the tightrope – and the economy will fight runaway inflation with too drastic interest rate hikes (US gasoline prices just hit a new record high). , even if well below the European level at 1.09 euros per liter …) practically stalls.

And here, according to German commodity trader Torsten Maus, there are very clear signs: You can already see an inverted yield curve when long-term capital market interest rates are lower than short-term ones: “In past, this has always preceded a recession, “he explains.

The US dollar has recently risen sharply, which in turn affects export-oriented companies: 20 companies with a market capitalization of over $ 100 billion described the “strong dollar” as a drag on sales. This is also one of the reasons why many companies have fallen.

Maus summarizes the most important reasons for the sell-off of the shares:

︎ “The most important thing is obviously the increase in interest rates, which in the US can reach up to 3.5 percent.”

︎ Furthermore, there would be a “liquidity brake” with the cessation of bond purchases by central banks. Many of the former “crown winners”, especially in the technology sector, now appear hopelessly overrated after the pandemic subsides, while in the manufacturing sector – reflected in the “Dax” or “Dow Jones” – the predicted recession is already being priced.

︎ Furthermore, according to the expert, even in these sectors there would be problems of the global supply chain, “in particular due to the” Zero Covid “policy underway in China”.

No one knows, of course, where the bottom might be – and most fear it is out of sight.

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