Is Black Monday 2024 over?

Come August till October, it is usually the time of the year crashes were to happen. ....

By the look of it, the global financial market is entering the witching period of the year. There was a sell-off on Wall Street last week arising from a poor job data which indicate recession is coming in.  

Extract from The Guardian last Friday, below:

The US labor market cooled significantly last month as unemployment unexpectedly rose, sparking fears of a slowdown across the world’s largest economy.

American employers added 114,000 jobs in July – short of the 180,000 additions expected by economists, and a marked decrease from the 179,000 added in June.

The headline unemployment increased to 4.3%, its highest level since October 2021, up from 4.1% the previous month.

Wall Street fell sharply following the official release. The S&P 500 declined 1.8% to a two-month low, as the technology-focused Nasdaq fell 2.4% and entered “correction” territory, having retreated 10% from the record high it scaled last month.

On the campaign trail, the strength of the US economy has become a key issue. With many still feeling the pinch from years of high inflation, a majority of Americans wrongly believe the US is in recession, according to a Harris poll for the Guardian earlier this year.

Federal Reserve

It looks to be a typical "too little, too much" or "too early, too late" of most Government policy intervention. Elon Musk lambasted Fed as foolish for not already cutting interest rate in his comment of Fed Chairman Jerome Powell for saying of plan to do so by September last Wednesday. 

That sent market into a tailspin and amplified by the poor job data on Friday. 

Read on in Thick as a Brick HERE.

It turned out the root of it from the Japan's BOJ decision to raise interest rate that sent arbitrageurs scrambling .... 

According to market watchers, the Black Monday few days ago was sparked by a squeeze on carry trade, a similar arbitrage trading strategy used in the 1997 attack on Ringgit which Mahathir conveniently picked on George Soros. 

What is interesting is the following observation:

Pax Asiana or BRICS 

Unlike 1987 when G7 dictate the direction of the global economy and Wall Street was the leading market, it is interesting that Black Monday of 2024 was triggered by events in Japan.

Its build-up was from the Far East more than six months ago. And, Wall Street managed to regain composure from leads provided by Tokyo. 

Is it confirming the end of the global dominance of Pax Americana and beginning of the long awaited Pax Asiana? Throw China and Russia in the picture, it is perhaps the shift from unipolarity to multiparity with BRICS replacing the role of G7?     

Wall Street is expected to be listless for a short while as caution sets in and market takes a breather after the bloodbath. The massive fall this time is far worse than the crash of 1929 or Black Tuesday that became the precursor to the Great Depression and World War II. 

The recovery on Wall Street will not be any more than bargain hunting and not any aggressive buying. 

Ponder this. Confidence will not return with Warren Buffet loudly announcing having sold half his holdings in Apple and reiterated again he is switching to cash. 

Apparently he has been a net seller of equities since October 2022.

Personal finance author, Robert Kiyosaki may not have the best track record in predicting market crash, but George Soros former partner in Quantum Fund, Jim Roger is also going cash. 

He is predicting the  "next market sell-off will be worst in lifetime" and described "global good time nearing the end". Jim prefer sugar and rice over Bitcoin.  

The likelihood attention will shift to markets in Asia for leads on the direction of global equities, in which the economies remained resilient.

Read on in Thick as a Brick HERE.