📉 S&P correction expands, what is going on?
Blood on the streets
What a week, guys. The S&P saw its worst drawdown since several years with -7.8%. We are now down -13% YTD and -18% since the ATH in February. Mag 7 tech stocks like Microsoft, Apple or Tesla have lost even more. The Fear and Greed index is at 4(!), which is panic mode.
The problem to solve
Is that this „Make America great again“ (MAGA)? Is that what we all hoped for? To find the reason, why the Trump administration is crashing the markets with the tarif war they inflicted, we have to look deeper. The US has a big debt problem. 36 Trillion dollar. The interest they have to pay for that was last year higher than their defense spendings, more than 1 Trillion Dollar. And they have to refinance a big chunk of that debt this year. CNBC talks about 3 Trillion USD.
Problems to solve is: Get those interest rates down and refinance that debt cheap. And that is what FUD and stock market weakness is triggering. 10y US bond is sinking since Trump started his job and threatened with tariffs. And they might not be where they wanna be yet.
What‘s next?
Keep calm and hodl if you are longterm investor. We might see some more downside but I think there‘s a chance we come to a halt soon. The S&P is approaching a support zone at 4.900-5.000 points, if we look at the chart. If we can hold that level it will be a very good sign for a revearsal and prevent an official crash. It depends on the reactions on those tariffs and how things develop. The Situation is very unclear and that’s the reason for all this FUD and downside. Stock markets hate uncertainty.
„Be greedy when others are fearful.“ Buffett says
I myself have started to stack some small portions of companies I believe in. Bought bits of Apple, Microsoft and Nike this week. Also Alphabet was on my list.
What is your take? How do you think this will turn out?
It's an excellent moment for the DGI investor, NKE is in my radar also
Trump works for Putin.
USA is Russia now.
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The market will still drop more in my own opinion, it has been on steroid since and needs to cool off, and despite the market drop the cost of good and commodities are still not dropping with it.