Another Financial Crisis on the Books

Financial Crisis

Momentum in the market is squarely red. And today’s 2% drop for the S&P 500 is a dizzying decline. It’s the worst drop that we’ve seen since May 12. There are a lot of worries in the market right now. And I know that all of this can be overwhelming. 

Today, many investors woke up to hear about a company called China Evergrande Group (OTC:EGRNY). The property manager makes $5 billion a year in profits… but it has more than $300 billion in liabilities. If it can’t raise capital, it’s likely going to default. An immediate collapse in the Chinese construction market would have far-reaching impacts. It would be especially negative for the global iron ore, copper, and nickel business. Australia would be the biggest loser given the significant amount of these commodities that it sends to China. 

The U.S. Financial Crisis

The Federal Reserve is going to be talking about interest rates again this week. But first, they have to decide on when to taper. The central bank is pumping more than $120 billion a month into the U.S. economy, and any sudden slowdown in this working capital would naturally hit the markets. So, we’re all waiting on the Fed, who inflated a massive asset bubble in the first place (and then members of the bank bought and sold the same assets that the Fed was purchasing.) We’re also caught up on a debt ceiling battle, September’s historical weakness, and a continued surge in COVID cases around the globe. 

It’s a lot to take in. But investors should always remember that the market has an upward bias over time. So, make sure that you use pull backs as possible buying opportunities, and use trailing stops to protect your profit and principle. This could be a choppy week.

But remember – there will always be days like this. Do not spend your day panicking or selling. Instead, just hold your nose and keep going. We haven’t been making mistakes. Why start now?

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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