4 ms·
The market is having issues now not because of inflation being kept low but because people panic when everything isn't going smoothly. The supply chain and WW3
by stjohnswarts 4y ago
The market is having issues now not because of inflation being kept low but because people panic when everything isn't going smoothly. The supply chain and WW3 have investors scared, and now they're panicking and leaving the markets and taking their profits with them. Others panick and get what cash they can. Some will buy low and it'll level off soon probably. I think this is more of a pull back than a recession. Generally the economy is in good shape it's just the speculators are bailing from the market.
- Foobar8568 4y agoTypically one can take a look at HOOD 13F, institutionals are enjoying free meals while retails are bleeding money by getting out.
- joe_the_user 4y agoBy effectively guaranteeing the market, the Fed made stock and bond markets more "money like" and so it didn't even have to overtly print money to create a money -printing-like effect ("the wealth effect") even though they also did print money to prove they were serious. So effectively we've had inflation for a while but most of it was inflation of asset values. If the Fed talks the market down and people sell, it will have destroyed money without other harsh measures. That doesn't mean there won't be more pain other ways also.
- adam_arthur 4y agoIt's almost entirely because of inflation. Persistent inflation raises the discount rate (10y treasury yield), and devalues all other assets. Why would you buy a 100x PE company (1% yield) when you can get 3% guaranteed today? Even growing at double digit rates, how many years just to match that return? Except many tech companies were 100x PS not even 100x PE. DDOG and NET are two examples. If the 10y runs to even 3.5-4%, and stays there, we're likely to see a 40-50% haircut in markets.