Stock Market Continues to Unravel

Clifford Bennett , Chief Economist at ACY

05.10.2021 11:00 am

#stock

Stock collapses can be heavy.

Good morning,

The further surprise of the times, could be the debt-ceiling bill becoming a real issue?

Back from a long weekend for some of us, hope it has all gone well.

Not going so well, are markets.

Equity markets continue to unravel, and this is a well stablished process now. Driven by the real-world fundamentals that do not look good. The world’s largest economies are clearly slowing, with stocks at very high valuations and energy prices and disruptions rising.

There are no 'save the day' levers left to pull. From either governments, or central banks.

All of the economic interference that grows out of Covid, and the creation of assets bubbles generated by extreme stimulus measures, will continue to come to the fore. Thus, the scariest stock market set up I have ever seen. Stocks are already in decline, as the real economy slows even more drastically.

I hope I am wrong, but people need to pay attention to the very real and potentially sustained downside risk.

The US dollar is falling back a little, but will likely be another dip to buy.

The Australian dollar, stabilising in the short term, but is by no means out of gaol on the medium-term view.

Oil is going in the exact opposite direction to the real global economy. Stagflation will be here for quite a while.

In general, the horizon is unfortunately murky and polluted.

Hence, Gold!

A stand-out ultimate hedge vehicle. It is interesting, that it started to rally before the US dollar began its small pullback in recent days.

Regards,

Clifford Bennett