Is the Next Financial Crisis Around the Corner?
After a few impressive years on the global markets, it seems like things may be slowing down. In turn, this has resulted in experts speculating about where we are headed with most of them agreeing that extensive negative trends are to be expected.
BullMarketz recently pointed out that there are two main indicators telling us that a market crash and a potential economic crisis is around the corner.
1. The American Stock Market Has Reached a Cap
The year 2018 has been one of the most impressive for the American stock market, and every industry has been rallying to new heights. The Dow Jones and the S&P 500 have been setting new records on an almost monthly basis, and at times it has felt like stocks have been competing for who could gain the most.
However, after Amazon and Apple set a new record when they both reached a 1 trillion dollar market valuation within weeks of each other, things have started to slow down.
Over the past couple of weeks, the famous FAANG (Facebook, Apple, Amazon, Netflix, and Google) tech stocks that have been driving a lot of this year’s impressive gains have entered a negative trend. Together the companies have lost over 800 million dollars in market value.
Now it seems like the American stock market has reached a ceiling that it can’t push past and we are only moments away from entering a full-blown bear market.
2. Brexit Is Destabilizing The Global Market
Another major driving force behind the increasingly unstable market conditions is the pound and the Brexit talks that seem to be leading nowhere. Since mid-April, the pound sterling has lost over 10 percent against the dollar, and on November 15th the pound fell 2 percent marking its’ worst trading day since the days after the Brexit referendum in 2016.
The pound struggles have now started spreading to the rest of Europe, and the euro is experiencing similar price drops as the pound.
Unfortunately, it appears as if the British government is unable to agree with each other and Brussels about the terms of the deal and as the March 29th deadline creeps closer, we should expect more destabilization in Europe.
Other Affecting Forces
In addition to the American stock market and the European currencies, there are other global indicators showing signs that we might be entering a market crash. For example, the Chinese yuan is struggling to stay afloat, and the American tariffs on China are slowly starting to take their toll on the Chinese economy.
Moreover, the price of crude oil has been surging and similar to the American stock market, it will reach a ceiling sooner or later.
It’s Not Over Yet
There is no doubt that worry has started to spread across the global markets and that we are currently in a dangerous situation that could quickly turn devastating. However, we can’t forget that this is all speculation and a future market crash is not a guarantee.
In fact, the American tech industry might just have entered a correction, and the current price falls might result in a new bull run. At the same time, the UK and the EU might agree on a deal that will benefit the European economy which would result in more growth following the Brexit deadline in March 2019.
In the end, it’s up to each and everyone to evaluate the market and prepare themselves for what could be coming.