Global economic bloodbath?

Share to help stimulate good governance, ensure future of people & M’sia

No News Is Bad News

For image info, go to https://fortune.com/2024/08/04/stock-market-crash-economic-outlook-recession-ai-fueled-bubble-fed-rate-cuts/ 

Global economic bloodbath?

KUALA LUMPUR, Aug 10, 2024: It has been reported that the US is heading for a recession and that a global bloodbath stock market crash is predicted.

If the report is accurate, then Malaysians must brace for “super hard” and miserable economic times.

No News Is Bad News reproduces below a news posting on the warning of the global economic “collapse”:

News

US Heading For A Recession – Global Bloodbath Stock Market Crash

5 August, 2024

The Nasdaq 100 index is now trading below 18,000 and just 6.5% away from entering bear market territory. Exactly 18 trading days ago, the index was trading at new all time highs. In overnight trading today alone, the Magnificent 7 have erased nearly $500 BILLION of market cap. Since July 16th, the S&P 500 has erased $3.3 TRILLION in market cap. That’s $235 billion PER TRADING DAY for the last 14 trading days in a row.

Apple stock, $AAPL, falls 7% in overnight trading after Warren Buffett announces he has sold 50% of his shares.

Based on overnight trading, Nvidia, $NVDA, is now down over 30% from its recent all time high.

The Nasdaq is now just 7.5% away from entering bear market territory.

Japan’s stock market just posted 2nd largest 1-day drop in history. The Magnificent 7 erased over $3 trillion in market cap from its recent high. Markets are trading like a recession has already arrived.

Japan’s stock market is now down 12% over the last 5 days and officially in bear market territory. The index has also now given up all of its 2024 gains in just 3 weeks.

Elsewhere in Asia, Taiwan’s Taiex saw the largest decline, sinking 5.7%, with computer chip maker TSMC losing 5.3%. Hong Kong’s Hang Seng index lost 2.1%, Australia’s S&P/ASX 200 declined 1.3%, and South Korea’s Kospi dropped 3.4%. This global market turmoil comes after the S&P 500 sank 1.8% on Friday for its first back-to-back losses of at least 1% since April.

The US economy may have just entered a recession

Is the world’s largest economy heading for a recession? Or is the economy simply hitting a rough spot? Recent economic indicators in the United States seem to point towards that direction with many analysts saying the economy could be in a recession early next year.

For a year, the U.S. Federal Reserve has maintained benchmark borrowing costs at a 23-year peak of 5.25%-5.50%. Some analysts worry that this prolonged tight monetary policy might be pushing the economy toward a recession. The Sahm Rule Recession Indicator, which breached the 0.50 threshold, has historically signaled the early stages of a recession in the U.S. economy.

Bloomberg rates strategist Simon White notes, “The market may be prematurely anticipating a recession that is unlikely to occur before next year at the earliest.” He adds that while the Sahm Rule’s trigger heightens recession worries, it often lags and misses many equity downturns, making it neither a necessary nor sufficient condition for a recession. Today’s unemployment rise was primarily due to an increase in the participation rate.

The US economy may have just entered a recession.

According to data from the Bureau of Labor Statistics released Friday, the unemployment rate rose to 4.3% in July, up from 4.1% in June and from recent lows of 3.4% in April 2023.

The increase officially triggered the Sahm Rule — a recession indicator developed by former Fed economist Claudia Sahm — which says that the US economy is in a downturn when the three-month moving average of the unemployment rate rises by 0.5% from its 12-month low.

The gauge has a perfect track record through at least the last nine recessions.

Despite the Sahm Rule’s impressive history, it is sometimes criticized because it fails to account for rising labor participation, which can raise the unemployment rate. Labor participation is indeed rising right now.

However, one job market indicator that isn’t influenced by participation rates — year-over-year growth in unemployed persons — also suggests that the US economy is in recessionary territory. The number of unemployed people has now grown by 14.5% year-over-year. Over at least the last 11 instances that this has happened, the economy has been in recession.

It’s important to keep in mind that just because these indicators have done a good job sounding the alarm about a downturn in the past doesn’t mean that this time will be the same.

Tom Essaye, the founder of Sevens Report Research, told Business Insider on Friday that other labor market indicators still point to a soft landing ahead — at least for the time being.

For example, weekly initial unemployment claims still sit at a fairly low 249,000, though they’re up from 194,000 in January. If they start to climb above 300,000 and reach toward 350,000, that would be the time to worry, he said. And while July’s jobs report was weaker than expected, with the US adding 114,000 jobs, the four-month moving average is still in a strong place, and further lackluster reports in the months ahead will be needed to establish a downward trend.

While things may be fine for the moment, however, history shows that when the labor market weakens to this degree, it usually deteriorates further — and sometimes quickly, as is evident in the charts above. Plus, employment data is backward-looking.

“With labor statistics being a lagging economy indicator, the real underlying economy can be even slower than the economic data suggests,” said Jack McIntyre, a portfolio manager at Brandywine Global, in a memo on Friday.

In addition to downcast labor market data, the ISM Manufacturing Index fell further into contraction territory this week, signaling that US manufacturing continues to slow. Job openings are also trending downward, sitting at 8.1 million in June compared to 12.1 million in March 2022.

BREAKING: SOUTH KOREA HALTS STOCK SELL ORDERS AMID MARKET VOLATILITY

In a dramatic move, South Korea has halted all sell orders on stocks for program trading as the sell-off in global equities intensifies. The country’s benchmark KOSPI index has tumbled 5% amid the market rout. This emergency action by South Korean authorities underscores the severity of the current market turmoil, as investors flee risk assets worldwide. The suspension of sell orders for program trading is likely an attempt to stabilize the local market and prevent further panic-driven selling. However, the steep 5% plunge in the KOSPI demonstrates the scale of the global market downturn, with investors gripped by concerns over economic growth and the impact of central bank policy. The Dow is down over 330 points, while the S&P 500 and Nasdaq are seeing losses of more than 1.4% and 2.3%.

Japan Stock Market Crash: Nikkei 225 index nosedives 7%

The Japanese stock market on Monday went into a tailspin as it extended sell-offs that began last week. The benchmark Nikkei 225 crashed more than 2,400 points or around 7 per cent to 33,488.08 within 30 minutes of opening. At 10:20 AM (Japan’s time), the index quoted 2,222 points or 6.19 per cent lower at 33,687.

Earlier on Friday, signs of weakness in the US economy triggered a sell-off on Wall Street as all the three major indices tanked sharply. The markets crashed on worries that the US economy could be cracking under the weight of high interest rates meant to tame inflation. This came after a report showed hiring by US employers slowed last month by much more than expected. Following this, the S&P 500 index sank 1.8 per cent on while the Dow Jones Industrial Average dropped 610 points or 1.5 per cent. The tech heavyweight Nasdaq composite fell 2.4 per cent.

The sell-off began just a few days after the Wall Street indices cheered Federal Reserve Chair Jerome Powell’s commentary on rate cut. He had indicated that inflation has slowed enough for cuts to rates to begin in September.