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WHAT THE F* IS WRONG WITH THE MARKET TODAY

WHAT THE F* IS WRONG WITH THE MARKET TODAY

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I believe a lot of y’all are wondering right now like why the market suddenly Toh so much over the weekends during the pre markets today some more.

Well brace yourself guys!! Although, it might be scary suddenly seeing a significant drop in your assets value, but here’s why instead of cutting loss, you should continue dollar cost averaging :)

❗️What’s going on ❗️

I know y’all saw the possible global recession talks and that’s why the sudden tragedy in today’s market. Well from the way I see it, recession has already been priced in. From way before, after Covid, recession and effects of recession has already been priced into the stock market. Today is just the myriad of bad news and economical data impacting the stock market

❗️Firstly, Feds refusing to cut interest rates ❗️

The last time Jerome Powell spoke, he wanted to wait till more “good inflation data” come in before he decides to cut interest rates.

So basically, after Covid, inflation rate in US have been sky high due to quantitative easing (printing of money) and helicopter money (giving their free people money).

The reason all these was done in the past was to ease deflation. Because of Covid, a lot of people are jobless and economy went into deflation aka there’s no spending in the economy. Hence, by giving people free money, they’re able to spend and hence, increasing the inflation rate. However, all these bit back in the ass when inflation rates sky rocketed and they’ve to increase interest rates to curb borrowings and spendings in the market to regulate the inflation rate.

So for the past 2 years, interest rates are actually at the highest level but with inflation rate coming down, a lot of people are expecting the Feds to cut interest rates.

✅ How does cutting interest rate helps ✅

By cutting interest rates, borrowing of money from the banks will be much more attractive and people are able and more willing to refinance for their business, take loans, etc. think about this like COE prices in sg. When COE prices are high, you won’t wanna buy cars right? Because it’s so expensive. And when it lowers, you’ll buy right?

Same thing here. A lot of businesses and people are waiting for interest rate cuts to afford more attractive interest rates for their loans.

Hence with more capital, people and businesses are able to do more and potentially increasing employment rate and increasing spending in the economy

❗️Secondly, employment data last Friday ❗️

Last Friday, US employment data comes in and rose to 4.3%. Increase unemployment rate leads to no income, leads to lesser spendings in the economy, leading to deflation. And that’s when the recession talk sets in. However, I’m pretty certain in September, the FEDs will cut interest rates since it’s technically on the table already.

❗️What are people worried about ❗️

Tbh, these are all short term volatilities. Whenever the economic data is trash, market goes down, but if it’s good, market goes up. You literally can’t foresee the economic data so take a chill pill and watch it play out guys.

Also, apart from the negative sentiments from economic data, big cap companies and tech companies like Appl, Meta, Microsoft, Goog, Amazaon, Tesla, Intel, Nvidia, etc are just adding fuel to fire

Starting with Nvidia, remember I warned you guys that when a company couldn’t deliver what they promised, the whole stock will tumble. Now you’re literally watching this play out. Nvidia delayed their new gen AI chips by possibly 3 months due to design flaw and this is huge because the demand for their product is HUGE. Literally all the tech companies like Tesla, meta, Google and Microsoft are buying chips from Nvidia and if Nvidia couldn’t deliver, all these companies just have to wait it out which will hinder technological advancement.

Also, Nvidia are investigated in unfair sales practises. They’re being reported for using their market dominance to pressure people to buy more of their products and charges businesses more for buying from their competitors. Hence, this burst Nvidia’s bubble due to over promising expectations

secondly tesla, I did a full analysis on Tesla on my other post, so please go and check it out if you’re interested. TLDR, their financial report for Q2 isn’t great and they also pushed back the highly anticipated robo taxi day which is another way of saying, over promising

Thirdly, the recent windows down time due to crowdstirke security update. Yall probably experienced this whereby your laptop showed black screen of death when you turn it on. This is caused by crowdstrike security updates and it has disrupted many businesses and their operations. So don’t be surprised when more and more companies come forward to sue crowdstrike. Delta has already started. This has impacted people’s faith in Microsoft’s security features if it’s so easily disrupted.

Fourthly, TSMC, one of the most lucrative chip making company. They’ve been manufacturing GPUs for Nvidia’s chips and certainly when Nvidia goes down, they’ll go down as well

Lastly, in general, earning expectations this quarter has been bad for the AI, chips and technological sector and this, coupled with the economical news and political presidency election, triggered panic selling across the global markets.

✅ What can you do ✅

I’m certain this will pass, it’s not as severe as what yall are seeing and I’m pretty sure a lot of people will be snapping up shares now due to cheaper and much attractive valuations. Won’t be surprised to see quite a sharp rebound the next few days.

So if I were you, I’ll dollar cost average, buy more shares while the value is low now.

Alternatively, you can switch all your assets to buying gold which is a safe haven during uncertain market as gold itself has intrinsic value and then wait out until the market stabilises. As such, you gotta be monitoring and reading up more often than you currently are doing.

Alright that’s all for market updates :) hope it helps! Do share to those who needs to read this