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"Stocks Are Cratering As Investors Worry About
The Perfect Storm That Is Erupting All Over The Globe"
by Epic Economist
"A stock market crash and bubble burst is on the horizon. Stocks are cratering as investors worry about the perfect storm that is erupting all over the globe. Indexes are plummeting, with big-name stocks dropping 50 percent or more as the bear market cycle begins. Hundreds of billions of dollars are being wiped out, and many market insiders are warning that the worst is still yet to come. Some of the factors spooking out investors recently are tied to the state of the global economy. In China, virus outbreaks and lockdowns are paralyzing production and aggravating supply chain issues. Regarding the conflict in Ukraine, a top Russian official said the threat of nuclear aggression is real. On top of that, soaring inflation in the U.S. is denting consumer demand for a wide range of goods, and rising interest rates are compromising the economy’s growth outlook.
All of this spells trouble for stocks, and with the tech sector falling apart, a broader market bubble burst seems to be coming next. Anxiety over new supply chain disruptions has impacted U.S. markets and caused the Chinese stock market to fall sharply as widespread outbreaks have bought entire cities to a standstill and hobbled manufacturing and shipping hubs throughout the country. Given that we have become extremely dependent on exports from China, the new restrictions halting the country’s economic activity have enormous implications for the western world.
Moreover, the Russia and Ukraine crisis is also frightening investors as it continues to escalate, sparking catastrophic consequences in and out of both nations. On Monday, Russian Foreign Minister Sergei Lavrov warned that the rest of the world should not rule out the possibility that a third global conflict could break out. The third factor weighing on the markets is inflation. On Tuesday, we learned that U.S. home prices rose 19.8% in February year over year, according to the S&P CoreLogic Case-Shiller national home price index. That is the third-highest reading in the index’s 35-year history.
Investors who have been banking on peaking inflation and strong earnings growth, are about to get bitterly disappointed, as explained Lisa Shalett, the chief investment officer of Morgan Stanley Wealth Management. “In our view, the bear market is not over," she said. Morgan Stanley’s strategists are the latest ones warning investors of more pain ahead. Shalett's bearish call underscores a growing pessimism on Wall Street. On a separate note, strategists at the investment bank led by Michael J. Wilson highlighted that the downfall of the S&P 500 has only just begun. “The S&P 500 appears ready to join the ongoing bear market,” wrote the equities strategy team in a recent note.
The bank is telling its clients that the ride is about to get even bumpier. On Monday, Wilson noted that “investors have very few places to hide in markets right now, with even defensive stocks succumbing to the pressure in recent days,” adding that "the market has been so picked over at this point, it's not clear where the next rotation lies”. "In our experience, when that happens, it usually means the overall index is about to fall sharply with almost all stocks falling in unison," he cautioned.
All signs of a perfect storm are here, and conditions will only get worse from this point on. What we have witnessed so far is just the tip of the iceberg, and as the economy falls apart, Wall Street braces for a historic meltdown. The consequences of blowing so many asset bubbles are finally catching up with us. The coming stock market crash will throw our financial markets into disarray, and it is safe to say that the result will not be pretty."
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