The Telegraph – Aug 5, 2024
Investors have ramped up bets that the US Federal Reserve will be forced into an emergency interest rate cut to support the economy as fears of recession grow.
A stock market sell-off that began on Wall Street on Friday spread around the world on Monday, with heavy selling from Tokyo to London.
Shares plunged and bonds rallied amid growing fears that the world’s biggest economy is heading for recession and concern that an AI-fuelled stock bubble has burst.
The tech-heavy Nasdaq Composite plummeted by as much as 6.4pc as Wall Street opened – its worst daily drop since the start of the pandemic – extending losses after a 2.4pc drop on Friday. The broader S&P 500 sank by as much as 4.2pc.
It followed sharp sell-offs in Europe earlier in the day, where the FTSE 100 closed down 2pc to register its biggest drop in more than a year. Overnight, Japan’s stock market suffered its heaviest loss since 1987.
The panic began at the end of last week after weaker-than-expected US economic data triggered fears that the Fed had left it too late to lower interest rates. The central bank held interest rates at 23-year highs of 5.25pc to 5.5pc last week, though chairman Jerome Powell indicated that the first cut since lockdown in 2020 was likely in September.
Frenzied bets on rate cuts at one point on Monday implied a 60pc chance that the central bank would be forced to announce a quarter of a percentage point interest rate cut within a week in response to the global loss in confidence.
Bitcoin fell more than 5pc as risk aversion spread throughout the market.
Large swings in market prices are likely to have been exaggerated by the fact it is August, a time when many money managers are on holiday. It means prices are being dictated by thinner trading volumes, which mean prices can swing more easily.
The scramble to sell triggered a series of outages of retail investor trading platforms, including Charles Schwab and Fidelity.
Both companies later said they had resolved any issues, while the odds of an emergency rate cut also ebbed to about 30pc.
Economists warned that an emergency interest rate cut by the Fed risked triggering more market turmoil in financial markets.
Michiel Tukker, senior European rates strategist at ING, said: “The question would then become: what does the Fed know that we don’t? And you don’t want to create the illusion that things are even worse than previously thought.”
Philip Shaw, chief UK economist at Investec, said a sustained sell-off could force policymakers to act.
He said: “Markets are falling but not seizing up. We are mindful that this can change, though, and signs of a threat to financial stability certainly would prompt central bank action. What matters is financial market confidence, which is somewhat intangible and therefore difficult to predict.”
Losses on the US stock market eased as the trading session went on after a closely-watched survey suggested fears of a US recession may be overblown.
The Institute for Supply Management (ISM) said its purchasing mangers’ index (PMI) for the services sector climbed to 51.4 in July, from 48.8 in June. Anything above 50 indicates growth.
However, the data followed weak manufacturing figures on Friday and Stephen Brown at Capital Economics said this was “historically consistent with GDP stagnating at best”.
Michael Gapen, US economist at Bank of America, said the panic triggered by a manufacturing slowdown was overblown, but added that the Fed was still likely to embark on a more sustained campaign of rate cuts.
He said: “We are forecasting a rate cut cycle that begins in September, with 25bp [basis point] rate cuts every quarter until a terminal rate of 3.25pc to 3.5pc in mid-2026.
“Aggressive rate cuts of 50bp or more are done on an emergency basis, as are intermeeting actions. Could we get there? Sure. But we are not there yet.”
ANOTHER STABBING
First Minister John Swinney has warned against “unhelpful speculation” relating to the stabbing of a woman in Stirling. The woman, 21, was treated in hospital for a “non life-threatening” injury on Saturday and a 29-year-old man was charged in relation to the attack, which took place at about 8.20pm in the town’s King Street. Social media reports on Saturday suggested three people had been stabbed and the attacker had appeared to be Muslim.. The British government has hipped weapons to Israel where children are targeted by israeli snipers and over 9000 children have been killed, many others are being starved to death London is the Europ[ean capital for stabbings, the Police gazette claim there are 250 black gangs in the greater London area, comprising approx 5000 men who are called ” troops” they want a white free london by 2030, and have their own flag a black Union Jack and they claim they are assisted in their plans by government who closed 600 police stations last year and decimated police numbers Anger should not go toward muslims but to criminal politicians
What is the real purpose of article written in with such close compact fiancialese?
Is it to inform? Is it to establish an emperor’s new clothes aura where everyone nods in agreement lest they show themselves to not know the fuck what it’s all about? Or is that we the common folk realise we shouldn’t trouble or small brains with such things and let the “real experts” deal with such matters?
By way of analogy, I suppose we have all heard favourite songs with a catchy refrain. The supporting lyrics make no sense or are barely audible, yet they support the song’s message. The chorus of a popular song or the main body of fiancialese needs its padding in order to deliver its pronouncements that would otherwise hang in mid-air.
Anything so intricate and convoluted is deliberate obfuscatory BS. A writer on any subject IMHO should always make the reader feel clever and not stupid. When a writer seemingly elevates their own cleverness while diminishing the readers’ will to live, something is amiss.
the US economy is best in world and will soon recover
The more chaos the better–for only via societal collapse can a white fascist/nazi force materialize to liquidate ZWOG.
Just saw a Walmart Telavivision ad showing a negro male in bed with a white female and their two mulatto kids. More Jew-Commie brainwashing.
@Simon Smith YOU have just shown how NON clever you are because you don’t understand the markets, with your quote ”When a writer seemingly elevates their own cleverness while diminishing the readers’ will to live, something is amiss”. Their was NOTHING of cleverness in the article just facts but then again some people like you are happy living off benefits and don’t give a F k
About Fed rate cuts or increases – the Fed follows the market:
https://duckduckgo.com/?q=fed+follows+the+market+elliott+wave&t=ffab&iax=images&ia=images
https://www.elliottwave.com/articles/the-fed-leads-and-the-market-follows-its-a-big-fat-myth/
https://www.elliottwave.com/pillars/do-interest-rates-follow-the-federal-reserve-or-do-interest-rates-lead-and-the-fed-follows/
@truth will out
Yes, I have availed myself of “benefits” at different times – my cultural heritage. Truth is I do scratch a living:
https://www.amazon.co.uk/stores/Simon-Charles-Smith/author/B08JJDYJPN?ref=sr_ntt_srch_lnk_1&qid=1722982363&sr=1-1&isDramIntegrated=true&shoppingPortalEnabled=true
My interest in the article owes something to the fact I’ve been researching political economy for the last few years, reading something like 200 books. En route, I’ve also studied obfuscations and journalistic-academic ne’er do welling. I have a good eye for BS.
But you, tying my presumed situation to my understanding is a non-sequitur isn’t it? My ability to discern an article or comment upon it has no clear connection with whatever my current situation is, or has been. Why didn’t you just say your dad was bigger than my dad? Very juvenile. But let me put you right on a little grammar, you cowardly retarded piece of shit. My suggestions in []:
“@Simon Smith YOU have just shown how NON[] clever [stupid] you are because you don’t understand the markets, with your quote ”[“]When a writer seemingly elevates their own cleverness while diminishing the readers’ will to live, something is amiss”. Their [there] was NOTHING of[] cleverness [clever] in the article just facts [,]but then again some people like you are happy living off benefits and don’t give a F k [note this website censors foul language whenever it comes across it. Ed.)]”
Far be it from me, but if you are so …(You are lucky. Often I will delete whole comments because of expletives. Ed.) … illiterate, how on earth can know anything about the “markets”. I would be happy for you to instruct me…
Clearly, you have got something in for me and this article provided the pretext. I have no idea why. Do you know me, or are you just happy to cower behind some pseudonym? What a pathetic spiteful piece of work you are. Were you the inspiration for Tolkien’s “Gollum” who was shunned by all his former family and friends?
@Rixon
Thank you, kid who owns the ball. It’s a pity your communication with me has only arisen from me swearing. May I remind you, I have asked you recently several about your credentials in the grander scheme of things and you have blanked me. One thing I’m not is ignorant. You could have addressed me by name as I respectively do of you. Are you so damn superior to the rest of us you can’t even condescend to that?