Who wants to hear that US and global equity markets have never been so exposed to the risks of a very profound crash?
We could not have done a better job of screaming from the rooftops about this. All this year, even as stocks made new highs in the first week of trading, was anyone listening? It is so hard to be the bearer of warnings, but that’s all our jobs in financial markets when it is appropriate if we are truly interested in our viewers, readers, and clients’ livelihoods.
This is very probably the big crash no one wants to have or even think about.
Slowing manufacturing led to the Great Depression. That is exactly what the world is experiencing now.
Yesterday, after that massive US Fed rate hike rally, we highlighted it would likely only last 24 hours. This is a major bear market.
Markets are in a rhythm now and it is pointing decidedly downwards.
Just a quick recap: Europe definite significant recession. China a, definite ‘touch and go’ recession. USA, very likely recession.
Triple recession risk in the world’s three major economies. It is not rocket science to work out what this means for northern hemisphere investment markets. The world will not have a recession, but all of the northern hemisphere will.
And people wanted to buy stocks on a rate hike? Thinking the whole cycle was a valley to look across?
Absurd market sentiment. But that is what markets are. An absurd pursuit of an equilibrium of buyers and sellers that can never be achieved. It is precisely why there are always immense opportunities in markets. Bullish or bearish.
The greatest thing about modern financial markets is the great variety of financial instruments to both hedges against risk and falling stock markets. We have been suggesting all year that investors play protection with their overall portfolios. To hedge against a potential crisis in markets, and this was even before the Ukraine war.
Everything is aligned fundamentally, precipitous falls in US consumer confidence, slowing manufacturing and service sectors, and just released a massive 7.5% fall in productivity. The US economy is in diabolical shape, Europe is at war with appropriate impact on consumers and businesses alike. And Shanghai, the world’s biggest port, is in extended lockdown. This is truly catastrophic.
Protect your share portfolio everyone!
Stock markets can fall further 20% to 30% from here. Very possible even further.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
