Is it just a “minor” correction and what does that even mean? The market closed around 6% down from what it was just 5 days ago, and 8% down from a few weeks ago. Volatility was incredibly high yesterday, even higher than the last big peak, which was at the start of the pandemic. There has been low predictability in how the fed will act and lots of debate about whether they are too late on acting. This has nothing to do with Japan, and everything to do with the US jobs report, which is literally what triggered the sell off. I am not sure why this blog post is trying to create a link to Japan.
Let’s also not forget, that the economy’s growth depends significantly on a few mega corps, which is not healthy. And those companies are likely overvalued. Berkshire Hathaway dumped Apple shares, Amazon lowered its guidance, and Nvidia - and AI as a whole - is now clearly known to be overhyped. If you remove these companies, what do you have? A stagnant economy with inflation that isn’t under control, reduced employment, and ballooning public debt. Clearly this isn’t a good situation, but America is lucky to have a strong currency and low exposure to global unrest.
I think your latter point that half the population wants the economy to crash for political gain is potentially true but it is equally true that the other half wants to pretend the country is doing well in every single way so Harris will have another talking point. So I am not sure why it is relevant.
The standard definition of a correction is a 10-20% market decline. “Minor” corrections aren’t defined, though one could imagine an event that barely meets the threshold making sense.
But yes, strictly you are right - this isn’t a correction at all.
> the Nasdaq Composite confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession
My point was that it was explicitly a correction and officially confirmed as such for some indices, and that the label of “minor” is more of an opinion or spin.
The US jobs report was 4 days ago and the market dropped a little bit. The Bank of Japan interest rate changed yesterday and the market dropped a lot. The article pointed out that the Japanese market almost crashed.
The carry trade was borrowing zero interest rate yen, then investing it in US stocks and other places. When Japan raised interest rates, investors sold their stocks, etc to cover. The other assets of carry trade also dropped at same time so not just US stocks.
The market may be weak, but the drop was from Japan.
The S&P dropped 2% on Thursday and 1.9% on Friday and 2.9% on Monday. Initial jobless claims report was Thursday, and the employment report plus unemployment data was Friday. Monday was a continuation of fears around the US economy because the US trading day started with Chicago’s fed reserve president saying that the jobs report was bad but that they are not going to react, at a time when many were calling for them to take emergency action. I agree that there are other factors like unwinding carry trades and global conflicts, but most news articles seem to say Monday’s drop was due to fears of a US recession.
The S&P 500 dropped 5% overnight between Friday and Monday, starting on Sunday night when Japan made their announcement. It went up on Monday from the bottom which is why the daily percentage is smaller. It has bounced most of the way back. Which is what you would expect from flash crash.
Let’s also not forget, that the economy’s growth depends significantly on a few mega corps, which is not healthy. And those companies are likely overvalued. Berkshire Hathaway dumped Apple shares, Amazon lowered its guidance, and Nvidia - and AI as a whole - is now clearly known to be overhyped. If you remove these companies, what do you have? A stagnant economy with inflation that isn’t under control, reduced employment, and ballooning public debt. Clearly this isn’t a good situation, but America is lucky to have a strong currency and low exposure to global unrest.
I think your latter point that half the population wants the economy to crash for political gain is potentially true but it is equally true that the other half wants to pretend the country is doing well in every single way so Harris will have another talking point. So I am not sure why it is relevant.