Slightly to my surprise, given that Asian markets fell overnight, the FTSE 100 has opened flat this morning.
So far, markets seem to have shrugged off the crypto collapse over the weekend.
I warned that was possible.
It does not mean tha the correction is not coming. I think that is inevitable.
I have already noted that the cryptocurrency market is crashing this weekend.
These are volatile assets – rises and falls of considerable magnitude are commonplace. Your observations are neither new nor unique. Indeed many have been warning of a Crypto collapse for decades.
The risk of contagion into other financial markets is high because:
I think a lot of the Tariffs barring those on China have been built in earlier in the year. I don’t expect (maybe barring India) significant moves elsewhere. Also worth pointing out the bubbles are largely caused by MMT advocates, such as yourself. With QE pouring money into the financial system with no concomitant increase in production inflation across assets has been considerable, including crypto, which suggests MMT and its advocates ought to confess they have been peddling myths for some time.
How are you an arbiter of what is an ‘acceptable’ asset? Given their returns they’d have been in breach of their Fiduciary duty not looking to maximise returns, especially given the appalling returns on other assets, especially ‘Green’ bonds.
As above – arguably the most negligent in this respect are UK public sector pensions which are in deficit to the tune of what some actuarial suggestions cite as around £100 trillion, and which will need huge cuts as a result, not least that in the University sector.
I don’t demur from this but there aren’t that many individual investors so their contagion is likely to be limited.
These are the basis for my fears.
How far could markets crash? By a very great deal, I suggest.
The S&P 500 already reacted on Friday afternoon:
That was a 2.7% loss on the day.
I thought this was all speculation which has no impact in the real world or was that yesterday?
But the capacity to fall a lot further is enormous. Nothing has justified the increase in value since mid-2023, and all of that is AI-based hogwash that is now more than ready to fall apart:
That market would easily fall by 40 per cent in that case.
This has been waiting to happen. It might not all do so this week, but such a fall is now possible. And so far, the UK media is almost entirely ignoring this.
I think you have successfully predicted 27 of the last 28 crashes since 2009.
I am not. And although I stress this might all blow over, the fundamentals very strongly suggest otherwise, with even the Bank of England suggesting that was the case last week.
I am worried, not because we do not need a correction, but because of the ramifications.
And the question is, have we got a government courageous enough to deal with this?
You wouldn’t know what ‘Market fundamentals’ were if they headbutted you and broke your nose. Even in the unlikely event you were correct I’d think my dog (deceased for 27 years) would have a greater understanding of what policy measure might be needed.
As I understand it, if a great panic comes people sell what’s liquid, and if that includes British shares then they go down too.
A young couple we know has sold all their shares because they have a need for cash by a specific date, to be the deposit on a house. That seems sensible to me; why put a house purchase at risk in hopes of a few more weeks of stock market gains?
They do retain some equities – in their pension schemes. Since that money is locked up for another quarter century they are prepared to risk keeping it in equities. This all seems pretty sensible to me.
Meantime, for us, I consider the lure of gold, m’hearties. Is it Too Late?
There’s always opportunities. You have to spot irrational negative moods that lead to heavy discounting. Plenty of idiots out there who really don’t understand companies and markets. On the flip side, people buying into Oracle and Nvidia, as if Andressen-Horowitz and Sequoia Capital are going to keep being sugardaddies to OpenAI forever.
Sensible couple. I told my daughter the same.
Trump wants to devalue the dollar and print money. So hard assets like gold and bitcoin are absorbing capital flight. I don’t see this stopping soon.
If you want a punt then you take the view that you will “buy high and sell higher” but don’t forget to sell!
Investors use gold as an inflation hedge over 10 years and consider a portfolio allocation of 3% to 9%. When entering a large position in a rising market some investors would buy 50% today and buy the rest monthly over 12 months (DCA). This will reduce their timing risk.
These are volatile assets
V_P. They can’t be an asset. They’re a currency. A token of value. Since a token of value must be valued by the goods or services they can be exchanged for they”re worth…round about zero I imagine.
Why would crypto have anything to do with the price of Tesco and Vodafone shares? There’s a couple of US companies involved in crypto but the FTSE 100 is mostly a load of fairly conservative companies.
If anything, I’d expect a reverse effect. Wankcoin falls 30%, people realise it isn’t a perpetual motion machine, panic, dump Wankcoin and look for safer places.
The FTSE 100 is at about the higher end of the historic P/E range, but it’s not mental. It’s not like the S&P 500 which is proper shoeshine boys giving stock tips bollocks.
The risk of Trump imposing unsustainable tariff rates of the sort he announced on China on Friday, triggering major market disruptions, is high.
Money never sleeps, pal.
Donny sent out a tweet yesterday that was all “I think China is going to be OK, actually” and BABA is up 5% in pre-market. China ETFs are up 2-3%.
I’d like him to have a 3rd term for what all the money I’m making picking up bargains after Trump speaks and everyone shits the bed.
Also, Hong Kong is down 1.5%. Normal level of fluctuation.
Richard Murphy. Wrong About Everything. All the Time.
Is this running market commentary going to be a new theme of his? Investment advice from a man whose only recent investments are in cakes and doughnuts? I sometimes wonder why he does this, is it for clicks, or does he really think that spaffing a few grants on tax-everything-that-moves reports give him some deep financial insight?
I think he might have invested in a few black shirts as well, just to be ready.
Black footer bags more like.
Pontificater pontificates…
There’s more actual and verifiable truth in that meme than the entire lifetime output of the Solaneous Sage….. 😉
So, he is predicting that markets will not correct and also that a correction is inevitable.
At least he will be half right.
Someone should persuade him to use his vast financial acumen to trade in securities and thus make some actual, err, money.
This would both further enhance his reputation as an Economic Sage, and also release him from his squalid perpetual quest for grants from dim charities.
Or perhaps it would just be enormously funny over here…
But that would be capitalist, Cadet, and would never do, whereas grifting is socialist.
It does not mean tha the correction is not coming. I think that is inevitable.
I look forward to the books hailing his financial acumen and detailing how he made his fortune with his famous Spud Short.
No Quantum today?
Awwwwww..
At time of writing, SPX is down 0.15% month-to-date, and the FTSE is up 0.001%. Armageddon is truly upon us. Again.