Yesterday, it became clear that some of the world's most seasoned analysts and investment managers had begun to look at the US stock markets with trepidation.
Indeed, one particular long-established investment manager, Jeremy Grantham of GMO fame, stated on Monday that he envisages the S&P500 index to collapse by 26% by the end of the year, citing junk bonds and unstable NASDAQ tech stocks as possible reasons.
Well, today the nervousness is all out in the open and other very well recognized commentators are following suit.
Morgan Stanley stated during the late hours of the European evening yesterday that they expect the S&P500 to plunge by a further 17 to 17% in the next four months.
This is a sudden depiction of low confidence in company stocks listed on American exchanges, and it has sent waves through the entire global financial markets to the extent that everyone from bank executives to cryptocurrency HODLers are talking about a potential stock market crash.
Even in Australia, the ASX exchange, based in Sydney, experienced a total wipeout of over $72 billion in the value of its listed stocks yesterday, as commentator Scott Pape stated that the country is 'well overdue' for a major stock crash.
The last time a stock market collapse occurred at the same time as poor credit conditions was during the global banking crisis in 2008, and whilst there certainly are poor indicators this time, the 2008 financial crisis was purely bank related. The rest of the economy of the West was fully operational and could work to pull things back.
Now, however, Australia has been subjected to two years of draconian lockdowns, almost making it an isolated island. This impacted important trade with its key partners in the Asia Pacific region, all of which continued their business unhindered and became ever stronger.
The United States economy has been somewhat overlooked recently, largely because the US Dollar has been holding itself up well against other Western majors, all of which have been tanking, especially the British Pound, and although inflation is high in the United States, it is lower than it is in Europe and the United Kingdom.
Therefore, the weaknesses in corporate stock have been perhaps overlooked and now the doom-mongers are moving in.
the Australian Securities Exchange plunged by 2.75 per cent in the opening minutes this morning, wiping out $66billion, after another high inflation reading in the US sparked fears of a giant interest rate rise in the world's biggest economy.
As the winter draws closer, and the potential cost of domestic energy is on the minds of the American and European public, conservatism and looking to cover existing expenses rather than invest in new ones is a priority for many.
A bear market it certainly is.Share
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