Tech Titans Plunge; Buffett Ditches US Stocks
If one were to say that the United States frequently uses interest rate hikes on the dollar to reap global benefits, then the current collective "Black Monday" in global stock markets is likely something the Federal Reserve did not anticipate.
According to multiple media reports, at the beginning of August, the Federal Reserve announced no interest rate cuts, the U.S. non-farm data came in colder than expected, the economy fell into a slump, and on top of that, the U.S. national debt broke through the 35 trillion mark. This series of events triggered a sharp drop in the U.S. stock market, followed by a yen interest rate hike, leading to a massive sell-off of Japanese stocks and causing a sharp decline in the Japanese stock market, which in turn triggered a plunge across the Asia-Pacific stock markets.
It is important to understand that in today's world, every country is navigating the waves of the global economy. A small amount of panic among individuals can quickly spread worldwide, and the same applies to the stock market. The sharp decline in the Asia-Pacific stock markets quickly spread to Europe and even the United States. Now, the U.S. stock market has plummeted once again, and the once-proud U.S. tech giants have experienced a sharp decline in their market value following the previous evaporation. Even "Oracle of Omaha" Warren Buffett has been selling off a large amount of U.S. stocks. Is this a signal that the U.S. economy is on the verge of collapse? With the global stock market plummeting and market panic rising, and the U.S. economy showing early signs of recession, does this mean that a financial crisis is imminent in the near future?
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The sharp decline of the seven major U.S. tech giants
As the global hegemon, the United States has used the dollar as a tool to raise interest rates and reap global benefits. Now, not only has the reaping not been successful, but the domestic economy has also suffered a heavy blow.
However, the United States remains unchanged in its intentions. On the 31st, it announced that there would be no interest rate cuts in August, increasing the probability of a cut in September. Following this, the U.S. July non-farm data came in colder than expected, and the market's response to the anticipated U.S. interest rate cut in September led to the yen's interest rate hike. Unexpectedly, this series of operations ultimately led to a collective "Black Monday" in global stock markets, and even the stocks of the high-tech companies that the United States has always been proud of could not escape the downturn.
At the beginning of August, the United States released its July non-farm data. The economic powerhouse, which has always been dominant, unexpectedly came in colder than expected.
Although the Federal Reserve has always emphasized that the U.S. job market is heating up, if one looks at the data released by the United States, it can be seen that the number of new people not engaged in agricultural activities in July was only 114,000. It is important to note that the market's previous expectation for the United States was 175,000, a difference of 61,000. This has truly silenced the Federal Reserve with facts.Setting aside the number of new jobs added in the United States, the U.S. unemployment rate is also on the rise, directly reaching 4.3%, hitting its highest level since 2021, and nearing the critical value of the Sam Rule.
What is the Sam Rule?
Sam, a former economist at the Federal Reserve, proposed that an increasing unemployment rate in the past usually meant that the economy had entered the early stages of a recession, and this statement has been verified in 9 of the 10 recessions in the U.S. economy since 1960.
Now, the rising unemployment rate in the United States has reached the critical value that triggers the Sam Rule, so the international market has started to worry about the economic situation in the United States. After all, the United States is the global financial center, and if something goes wrong in the United States, the whole world will suffer.
It is precisely because of the worrying economic situation in the United States that people's panic has spread rapidly, coupled with the imminent interest rate cuts in the United States and a series of interest rate hikes in the Japanese yen, triggering a chain reaction of global stock market crashes.
On the morning of the 5th, following the operation of the Japanese yen interest rate hike, the Nikkei 225 plummeted, with a decline of 12.4%, setting a historical record and directly impacting the rise this year.
With the stock market crash in Japan and concerns about the U.S. economy, people fell into panic, and then the Asia-Pacific stock market triggered a chain reaction.
South Korea's startup index fell by 8%, and the Taiwan Stock Exchange was also not immune.
This time, the panic over the U.S. economy and the yen interest rate hike led to a complete collapse of the Asia-Pacific stock market, which eventually affected the whole world.
On the evening of August 5th, when the U.S. stock market opened, the Dow Jones Index, the Nasdaq Index, and the S&P Index all fell, and the most unexpected among them was that since the last U.S. stock market crash, the seven major U.S. technology giants once again plummeted.It should be noted that the three pillars of American hegemony are, first, the US dollar, second, the US military, and last but not least, the high-tech companies that the United States has always taken pride in. With the US dollar's interest rate hikes, American high-tech companies have been aggressively promoting their promising future in the international market, leading to a massive influx of quick money into these enterprises.
However, since the unexpected poor performance of the US non-farm data, many have started to believe that American high-tech companies are overvalued. To avoid the impact of a potential US economic downturn, a significant amount of capital has been rapidly withdrawn from the US high-tech stock market.
According to data, as of 11 PM Beijing time on the 5th, NVIDIA's stock price plummeted by more than 7%. Tesla also suffered a significant setback with a stock price drop of 4.5%; Amazon lost more than 4%; Meta fell by over 3 percentage points. Additionally, Microsoft and Google A were not spared, both experiencing a drop of more than 2 percentage points.
The situation with Apple is particularly worrisome, as it once plummeted by more than 10%, but fortunately, the decline slowed down afterward, eventually settling at a terrifying drop of 4.9%.
Statistics show that after this decline, the seven major US tech giants evaporated $650 billion overnight.
Now that the global stock market is in a slump, where will the global financial and economic markets go next?
Is a global financial crisis imminent?
If the unexpected poor performance of the US non-farm data triggered market panic, then Warren Buffett, who has been navigating the stock market for years, using his unique vision to accumulate substantial wealth and earning the nickname "Stock God," his massive sale of US stocks before the stock market crash has left people at a loss. Could it be that the US economy is really about to fall into a recession? Is a global financial crisis coming, or is all of this just the United States' last trick to harvest the world?
Speaking of Buffett, many people regard him as a barometer for the stock market's bullish and bearish trends. It is important to know that while the Japanese yen has depreciated, the Japanese stock market has been able to keep soaring, and his contributions are indispensable.Based on the economic conditions of the Japanese market and the turmoil in the international financial markets, borrowing heavily in Japanese yen under the premise of predicting a devaluation of the yen and investing in high-dividend Japanese stocks.
The reality unfolded just as Buffett had anticipated, with the yen devaluation arriving on schedule. For him, the principal borrowed was depreciating, reducing the debt he needed to repay, while the high dividends remained unchanged, enabling him to make a substantial profit. Many stock investors followed his lead, which also led to the seemingly paradoxical situation of the yen depreciating while the Japanese stock market could maintain both.
Now, Buffett has massively sold off Apple shares, directly selling off half of his holdings. Does this mean that Buffett also has a pessimistic view of the US economy?
It is important to know that in the currently booming field of artificial intelligence, many investors have poured a significant amount of capital into this area, hoping for a breakthrough in artificial intelligence that would allow them to reap huge profits. Apple Inc. is one of the biggest beneficiaries of AI advancements. Now that Buffett is selling off his shares in a big way, it is inevitable to ponder the implications.
Is it to avoid the risks brought by a potential US economic recession, to sell off and secure funds before being too affected, and then to bottom-fish for excellent assets when global assets decline? Or is it, as some outsiders suggest, to accumulate funds for the next successor?
Although Buffett's true motives are not yet clear, one thing is certain: those who have been navigating the stock market for years must have their reasons.
Now, with the US non-farm data shockingly poor, the US national debt scale breaking through the 35 trillion mark, and the US dollar rapidly weakening, does this mean that a global financial crisis is about to break out in the near future?
After all, the risk of a US economic recession continues to rise, and the high-tech enterprises AI, which have been hyped by the US, also show signs of a bubble burst. Buffett's selling adds to the panic among people, and coupled with Japan's key moment of raising interest rates against the trend, all these factors have caused a shock to the global financial market. The global financial market is particularly unstable now, and it seems that with just a slight touch, it could explode rapidly.
However, there is another possibility: this may not be the beginning of a financial crisis, but the start of the United States' harvest.
From the perspective of the dollar's cycle, it is now the time for the United States to wield their "scythe of death."At this critical juncture, we observe a bleak outlook in the U.S. economic data, the "meticulous coordination" between the Federal Reserve and the Bank of Japan leaves one astounded, along with Warren Buffett's "massive sell-off" at a crucial moment, and Israel's incitement in the Middle East... These factors, intertwined, have triggered panic among people, causing a significant shock to the global financial markets.
Only when other nations are battered and beaten, and high-quality assets are suppressed to prices as low as cabbage, can Wall Street seize the opportunity to execute their harvesting plan.
After all, American capitalists are not easily defeated.
Now, the future of the global financial market is shrouded in uncertainty. In stark contrast to their plummeting performance, the impact on China's stock market is not very significant. However, we must remain vigilant at all times. If this is indeed a conspiracy by Wall Street capitalists, then we must be prepared for the worst and mitigate the impact of the global financial market on us.
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