The Dow Jones dropped a massive 767 points as all markets lost about 3% or more yesterday. Increasing troubles in the global economy paired with a lack of fundamental strength in the the US, Australia, UK and China are believed to be the cause.
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A bear market appears to be rearing its ugly head as the steam has run out on the engine of this fiscally stimulated bull market in stocks and equities, even as central banks lower their interest rates, i.e. the price of money, with little to no positive effect on prices around the world.
We’ll wait and see, but it’s not panning out well.
With German and Chinese manufacturing as well as trucking companies having to close their doors, it seems an economic recession is in the cards, if not guaranteed. The velocity of money has been slowing to all-time lows, proving that central bank intervention comes at a high price and the middle class does not see much benefit from all the quantitative easing for the past decade.
That’s precisely what we could have observed on Monday in the equity markets around the globe. It does not appear the stock market has any room to go higher, and why should it? The last 10 years of a bull market have been very artificial as they have not been supported by real growth, only by accounting tricks.
Some economists are expecting that the 10-year bull market in equities has come to a finish and a stock market crash will inevitably result.
Big banks and the 1% have benefited once again at the expense of the average person, but it won’t continue forever. With gold and silver skyrocketing up after 6 years of sideways price movement, there’s really no way to know just how much the American dollar can withstand as the Federal Reserve plans even more interest rate cuts.