Do we expect an epochal collapse of the markets?
Do we expect an epochal collapse of the markets?
A dark secret lurks behind the recent rally in the US stock market, which set new annual price highs. Stock price growth is primarily driven by developments in artificial intelligence, which have dominated markets throughout the year.
NVIDIA (NASDAQ:{{6497|NVDA}}) shares soared 164%, bringing its valuation to $1 trillion.
As a leader in artificial intelligence, NVIDIA offers chips to users as well as an in-house tool to verify the accuracy of ChatGPT responses.
With a $4 billion gain in the {{20|Nasdaq 100 index}} in 2023, and recent news of a new US debt ceiling deal, optimism is growing.
I've studied stocks in the Nasdaq and {{166|S&P 500}}, and I've realized that very few stocks are driving prices up.
Currently, there are four companies investing in AI research and competing with each other. For example, Google (Alphabet (NASDAQ:{{6369|GOOGL}})) and Microsoft (NASDAQ:{{252|MSFT}}) are working on the best AI-powered search engines and right now Microsoft has the edge.
This type of fluctuation in equity movements has occurred only three times previously, in 1970, 2000 and 2007.
Each of the last three times marks the start of a deep recession with a crash in the markets.
Despite a year since concerns arose about the possibility of a recession in 2023, the US economy has proved resilient to high inflation and rising rates.
State-level regulators have expressed their views on the matter, arguing that there will be more rate hikes later.
In early May, Fed Chairman Jerome Powell announced the end of the rate hike process and the start of a stabilization period.
However, economic data released in recent weeks has cast doubt on this strategy.
Inflation is still high, but the economy is showing signs of resilience.
Hence, we can expect further rate hikes in the coming months. In short, things appear to be going well despite inflation concerns.
Eventually every economy can crash, and if you're not careful, yours can plunge into a Recession without warning.
Nq
The truth is that the effects of high rates do not show themselves suddenly, but take about six months to manifest themselves visibly.
It is also important to remember that AI is just software and it is possible that it will be limited soon due to the potential risks.
Market bubbles, however, are often underpinned by fundamentally unwarranted speculation.
All bubbles eventually pop, and when markets crash, they will crash quickly.
The conditions for an economic collapse are there, the impact of high interest rates will soon start to feel, the next macroeconomic data will be negative, the sudden fall of the AI bubble with its software restrictions, the FED implementing aggressive policies to counter high inflation and the slowing Chinese economy.
Europe's economy, with indices such as the {{172|DAX}}, {{177|FTSE MIB}} and Ibex 35 having more solid fundamentals, will hold up against indices that will not hit annual lows.
After doing some research and analyzing the markets, I decided to go short on Nasdaq 100 Future and S&P 500 Future.
I predict that by next quarter the prices will be 4000 and 12000 respectively.
Author's note:
The information and content provided on this site should not be considered as an invitation to invest in the financial markets. The Content is a personal opinion of Mr. Antonio Ferlito.
A dark secret lurks behind the recent rally in the US stock market, which set new annual price highs. Stock price growth is primarily driven by developments in artificial intelligence, which have dominated markets throughout the year.
NVIDIA (NASDAQ:{{6497|NVDA}}) shares soared 164%, bringing its valuation to $1 trillion.
As a leader in artificial intelligence, NVIDIA offers chips to users as well as an in-house tool to verify the accuracy of ChatGPT responses.
With a $4 billion gain in the {{20|Nasdaq 100 index}} in 2023, and recent news of a new US debt ceiling deal, optimism is growing.
I've studied stocks in the Nasdaq and {{166|S&P 500}}, and I've realized that very few stocks are driving prices up.
Currently, there are four companies investing in AI research and competing with each other. For example, Google (Alphabet (NASDAQ:{{6369|GOOGL}})) and Microsoft (NASDAQ:{{252|MSFT}}) are working on the best AI-powered search engines and right now Microsoft has the edge.
This type of fluctuation in equity movements has occurred only three times previously, in 1970, 2000 and 2007.
Each of the last three times marks the start of a deep recession with a crash in the markets.
Despite a year since concerns arose about the possibility of a recession in 2023, the US economy has proved resilient to high inflation and rising rates.
State-level regulators have expressed their views on the matter, arguing that there will be more rate hikes later.
In early May, Fed Chairman Jerome Powell announced the end of the rate hike process and the start of a stabilization period.
However, economic data released in recent weeks has cast doubt on this strategy.
Inflation is still high, but the economy is showing signs of resilience.
Hence, we can expect further rate hikes in the coming months. In short, things appear to be going well despite inflation concerns.
Eventually every economy can crash, and if you're not careful, yours can plunge into a Recession without warning.
Nq
The truth is that the effects of high rates do not show themselves suddenly, but take about six months to manifest themselves visibly.
It is also important to remember that AI is just software and it is possible that it will be limited soon due to the potential risks.
Market bubbles, however, are often underpinned by fundamentally unwarranted speculation.
All bubbles eventually pop, and when markets crash, they will crash quickly.
The conditions for an economic collapse are there, the impact of high interest rates will soon start to feel, the next macroeconomic data will be negative, the sudden fall of the AI bubble with its software restrictions, the FED implementing aggressive policies to counter high inflation and the slowing Chinese economy.
Europe's economy, with indices such as the {{172|DAX}}, {{177|FTSE MIB}} and Ibex 35 having more solid fundamentals, will hold up against indices that will not hit annual lows.
After doing some research and analyzing the markets, I decided to go short on Nasdaq 100 Future and S&P 500 Future.
I predict that by next quarter the prices will be 4000 and 12000 respectively.
Author's note:
The information and content provided on this site should not be considered as an invitation to invest in the financial markets. The Content is a personal opinion of Mr. Antonio Ferlito.