What has been
happening on Wall Street the past few days has been nothing short of
stunning. On Thursday, the Dow Jones Industrial Average plummeted 358 points. It
was the largest single day decline in a year and a half, and investors are
starting to panic. Overall, the Dow is now down more than 1300 points from
the peak of the market. Just yesterday, I wrote about all of the experts that are warning
about a stock market crash in 2015, and after today I am sure
that a lot more people will start jumping on the bandwagon. In
particular, tech stocks are getting absolutely hammered lately. The
Nasdaq has fallen close to 3.5% over the past two days alone, and it has
dropped below its 200-day moving average. The Russell 2000 (a small-cap
stock market index) is also now trading below its 200-day moving average.
What all of this means is that the stock market crash of 2015 has already
begun. The only question left to answer at this point is how bad it will
ultimately turn out to be.
When stocks were
booming, tech stocks were leading the way up.
But now that the
market has turned, tech stocks are starting to
lead the way down…
The Dow
and the S&P 500 are negative for the year. The so-called “FANG” stocks –
Facebook, Apple, Netflix, and Google – were some of the biggest losers, and
helped send the Nasdaq more than 2% lower. Biotechs also suffered big losses;
the iShares Nasdaq Biotechnology ETF fell 4% to a three-month low. The Vix,
which gauges market expectations for near-term shifts in the S&P 500,
surged more than 21%.
And Twitter is
absolutely imploding. It has fallen below its IPO price, and at this
point it is now down 65
percent from the peak.
Of course it was
inevitable that Twitter and these tech stocks would start falling
eventually. I specifically warned my readers about Twitter’s stock price nearly two years ago. I hope
people listened to what I was saying and got out in time.
This current
market crash is happening in the context of a full-blown global financial
meltdown. Stock markets all over the planet are collapsing, and currencies are being
devalued left and right. The following comes from a recent piece by Wolf Richter…
Hot money
is already fleeing emerging markets. Higher rates in the US will drain more
capital out of countries that need it the most. It will pressure emerging market
currencies and further increase the likelihood of a debt crisis in countries
whose governments, banks, and corporations borrow in a currency other than
their own.
This
scenario would be bad enough for the emerging economies. But now China has
devalued the yuan to stimulate its exports and thus its economy at the expense
of others. And one thing has become clear on Wednesday: these struggling
economies that compete with China are going to protect their exports against
Chinese encroachment.
Hence
a currency war.
Two more major
shots in the currency war were fired on Thursday by Kazakhstan and Vietnam…
Hit by sharp
declines in crude prices, the oil-producing nation of Kazakhstan introduced a
freely floating exchange rate for the tenge, which
subsequently lost more than a quarter of its value.
The State
Bank of Vietnam (SBV) devalued the dong (VND) by 1 percent against the dollar
on Wednesday—its third adjustment so far this year—and simultaneously widened
the trading band to 3 percent from 2 percent previously, the second increase in
six days.
A quarter of its
value?
Now that is a devaluation.
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