🚀 Market Crash Continues

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Market Overview
Read time 1.4 minutes

Year To Date Performances:

1. U.S. stocks plummeted on Monday as part of a global market sell-off fueled by recession fears, with Japan's Nikkei 225 suffering its worst day since the 1987 Black Monday crash, plunging 12%. The Dow Jones Industrial Average, Nasdaq Composite and the S&P 500 all fell more than 2%, with the DOW dropping more than 3% in intraday trading. Investors reacted to Friday's disappointing July jobs report, concerned that the Federal Reserve is behind in cutting interest rates to counter an economic slowdown, maintaining rates at a two-decade high last week. Megacap tech stocks were among the worst performers, with Nvidia down nearly 5%, Apple falling over 3% after Berkshire Hathaway cut its stake, and other significant losses from Tesla, Broadcom, and Super Micro Computer. Globally, U.S. Treasury yields fell as investors sought safe-haven bonds, with the 10-year note yielding 3.76%, its lowest since June 2023. Bitcoin tumbled from nearly $62,000 to around $52,000, Europe's Stoxx 600 dropped 2.4%, and the CBOE Volatility Index reached its highest level since early 2020 at 46. Speculation about the unwinding of the yen carry trade added to the decline after the Bank of Japan raised interest rates. Chicago Fed President Austan Goolsbee suggested on CNBC that current interest rates might be too restrictive, indicating the central bank would take action if economic conditions worsened.

2. Wharton’s Jeremy Siegel urged the Federal Reserve to enact an emergency 75 basis-point rate cut following a disappointing jobs report, advocating for another 75 basis-point cut at September’s meeting, with a target federal funds rate of 3.5% to 4%. Currently, rates are at 5.25%-5.5%, the highest in 23 years. The July jobs report revealed slower-than-expected growth and a rising unemployment rate of 4.3%, the highest since October 2021. Siegel criticized the Fed for maintaining high rates despite significant progress toward the 2% inflation target, noting that a similar emergency cut in 2001 led to a market rally. He warned that failure to act before September would negatively impact the economy, urging the Fed to be as responsive in lowering rates as they were in raising them.

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4. Headlines

   1. Nearly 30 GOP members have endorsed Kamala Harris including Stephanie Grisham (Trump’s former press secretary).

   2. Bitcoin’s decline during the recent market crash has again questioned its role in financial markets. While often promoted as “digital gold,” unlike gold, it doesn’t rise in times of financial uncertainty and instead follows markets downwards, meaning it fails to provide the #1 investment characteristic of gold: stability.

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Onwards and Upwards,

Liam Gill