My in-depth article of June 2018 where I had discussed in detail why I thought that the American financial markets will come to a screeching halt, has come true. But once again with a heavy heart, let me write that the worst has just begun. There is no relief in sight based on my analysis.
Dow Jones has entered into a “Bear Territory”. German DAX has entered into a Bear Territory. Shanghai has entered into a Bear Territory. Others are just standing at the edge of a cliff looking into a bear territory. Federal Reserve has no mercy in its plans. Trump’s ad-hoc policies and an ego based trade war is leading the world into an abyss. Corporate debt is at its highest in 10 years. Rising interest rates will put hundreds of companies at the risk of default. That will rattle the Bond Markets.
Dow has seen its worst week in 10 years. That is a sign of confidence eroding and eroding fast.
Liquidity around the world is drying up. Cash is fleeing the equity funds. The only good thing happening is the low oil price but even that is not a catalyst for growth. 90 day Tariff Ceasefire is coming to an end between the two giants, America and China. North Korea has blatantly refused to Denuclearize itself going back on its promise which I had never believed and had predicted in many of my articles.
The question now arises, is
2019 going to be a good year for the world financial markets ? Far from it in
Dow is just an indication of where the market is to go. Tech stocks actually lead the confidence of the investors in my view. But there are disasters after disasters waiting to happen in Tech stocks in the coming year. Facebook being the biggest disaster waiting to happen. 40% off from its 52 week high is just a sign of what is to come.
Tech industry thrives on trust. And Facebook has broken that trust at all levels in 2018. One controversy after another. Governments holding hearings against FB executives around the world. Including Congress itself. European lawmakers making FB’s life tougher day by day.
Another victim of the trade war is Apple. It may have touched a Trillion Dollar mark briefly, but it has seen only one direction after that. South. Apple woes have just begun. It has missed the biggest opportunity of growth by mispricing its product in India. That is nothing short of a disaster whose affects we shall see in the next quarter.
Once the overall financial markets slow down, Financial sector gets hurt the most. All its revenue generating activity slows down and it further erodes the confidence of its investors. Leading this phenomenon is Goldman Sachs & Co and its fraud investigation of a $6.5 Billion scam by the Malaysian Government into its 1 MDB fund.
This investigation will not go away. It is an open shut case of fraud at the highest level exposing GS & Co to a potential lawsuit by the Malaysian Government of $7 billion dollars. That is not a small amount even for a giant like Goldman to cough up.
All these signs are screaming of a world financial markets Contagion in the making. From Japan to South Korea to FTSE to Bovespa. Tighten up your seatbelts. The bumpy ride has just begun. And it is going to be very ugly.
Author: Mir Mohammad AliKhan