U.S. stocks have fallen for four consecutive days, with the three major stock indexes all falling by more than 4% in August. In the first half of this year, the S&P 500 index plummeted by more than 20%; international oil prices fell below US$90, WTI Crude oil futures fell 9.2% in August, the third consecutive month of decline, the longest consecutive decline in more than two years; gold futures fell closer to $1,700, and gold futures prices fell by about 3.1% in August. It was the fifth consecutive month of decline, the longest losing streak since September 2018. ? Wall Street The wealth of financial tycoons has shrunk. The five major technology giants have lost hundreds of billions in market value. The summer market situation of US stocks may be a scam. What happened to global markets? What should investors do? Where is the market headed? The decisive factor for
is not the market, nor the financial tycoons on Wall Street, nor a few chattering market analysts. Even the arrogant big capital is helpless. The decision lies with the Fed , with Powell, with the Fed officials. The direct reason is that despite the economic recession, the Federal Reserve and the European Central Bank will radically raise interest rates and fight high inflation to the end! The underlying problem may be the market’s concern that the United States, Europe and even the world may fall into economic recession. This is the reason why the stock market, gold market, commodity market, etc. have all fallen recently. However...
The Federal Reserve has made the strongest and most shocking message at the Jackson Hole Central Bank Governors Meeting: it must curb inflation at the expense of economic growth; it must fight high inflation at the expense of economic recession. ; Will not take into account other economies around the world, but will continue to raise interest rates to the end, vowing to reduce the inflation rate to 2%. Therefore, the rise and fall of the stock market is not within the scope of the Fed's consideration at all. What impact will the Fed's aggressive interest rate hike have on the stock market? What is the impact? How long? The Fed won't care at all. This is the current situation of the global financial market. Investors around the world have to look at the Federal Reserve's face to decide your investment behavior. Otherwise, you will lose all your hard-earned money and still count the money to the banker . The market is so cruel and ruthless!
Looking from the stock market, although it is not yet clear where the bottom of the US stock market is? However, it is highly likely that U.S. stocks will continue to decline in the third and fourth quarters of this year. Some institutions predict that if the U.S. economy experiences a growth recession or soft landing, the S&P 500 index will drop to 3,400 points, which means that the index will fall by 15% from the closing level on Tuesday (August 30). But if the U.S. economy experiences a "real recession," the index could fall to 3,000 points. I completely agree with this prediction direction.
The biggest impact on the stock market is the direction of the Federal Reserve's monetary policy. Federal Reserve officials almost unanimously sent out signals of radical interest rate hikes and unconventional tightening of monetary policy. After Federal Reserve Chairman Powell released his hawkish stance at the Jackson Hole Central Bank Governors Meeting last Friday (August 26), this Tuesday (August 30) the "third in command" of the Federal Reserve and New York Fed President John- Williams reiterated his firm hawkish tone in his speech. He said that the Federal Reserve needs to continue to raise interest rates next year and maintain high interest rates. It needs to keep interest rates at a level slightly above 3.5% for the long term. This interest rate level is fatal to the U.S. economy and financial markets, which have been easing currency for many years, and even to the global financial markets. The financing costs of companies in the United States, especially technology companies, will increase sharply. Other countries around the world are under great pressure to depreciate their currencies, and they have put forward higher requirements for other countries and regions, including investment return and financial market profitability. Otherwise, there will be a tsunami of capital. General exodus! Every time the Federal Reserve enters a radical interest rate hike channel, global financial markets tremble!
Investors must be aware of the direction of the Federal Reserve's monetary policy and its impact on global financial markets. The risk has come, you have to know it. Keeping your wallet tight is the only way to go, so cash is king and comes in handy!
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