Markets are moving furiously as globalization works its magic: in Japan, the Nikkei has plunged 12%+ on the worst daily session since 1987. The Yen is trading at 142, after topping 162 two weeks ago. Several Billions (perhaps trillions?) of yen carry trade are being unwound very quickly, which is creating panic selling. Europe is down between 2-3%, and the VIX index is up 100% over the last 2 trading sessions, opening today at 40. In the bond market, the curve (2-10s) is 5 bps away from being flat after being inverted for 2 years, and it’s already discounting an FOMC intermeeting cut. Tech mega caps have pre-opened today with high single digit drops, with the odds of a 75 bps cut already being priced, and the market has come back to discounting 6 cuts for the year, like it did in December 2023. On the chart below, you can see the median paths for the S&P500 in the last 8 instances the Fed cut rates (brown line) and when there was a recession (grey line). If it follows history to the dot, which it rarely does (but it rhymes), we might have a bear market within 6 months.
Want to know more? join Fund@mental here www.myfundamental.net
#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning
Comments