$1 Trillion wiped out as massive trade war between USA and China causes markets to crash
Generally speaking, most stock market corrections are normal.
Markets get heated up on their own momentum and look for a breather to cool down.
However, the present savage correction in the markets is caused by a vicious trade war between two of the greatest economies of the World, namely USA and China.
So far, the trade war has had draconian ramifications over the stock markets.
(Image credit: South China Post)
According to Bloomberg, a colossal sum of $1 Trillion has disappeared into thin air owing to the great crash.
Some experts are hopeful that a compromise may be around the corner and the damage may be contained.
“In these types of situations, the initial messaging can be quite protectionist in nature. After the fact, more frequently than not, President Trump has managed to make concessions that have alleviated some of these concerns. We would expect — the first reaction notwithstanding — that there will be discussions that will moderate the outcome,” Daniela Mardarovici, a portfolio manager said.
A similar view was expressed by Matt Maley, an equity strategist.
“Although Trump might not get us into a full-blown trade war, it sure seems like he is intent on changing the situation in a significant way. Therefore, we think those who say it will be a non-event…are on shaky ground,” he said.
However, some experts warned that the situation is likely to drag on for several weeks at least.
“Trade and tariffs will be an issue for at least the coming weeks, if not months. The ability for this to spiral doesn’t seem high but it is a growing possibility, especially with Gary Cohn’s resignation. In our view, the domestic & global rhetoric and repercussions spurred from tariff talk and Cohn’s departure will likely weigh on the market in the near-term and keep a bid to volatility,” Chris Harvey, head of equity strategy at Wells Fargo Securities, warned.
— CNBC-TV18 (@CNBCTV18Live) March 23, 2018
#BANKNIFTY #Nifty #NIFTYFUTURE #nifty50 #banknifty
#SandpaperGate #500DaysOfDemoDisaster #ShahOnAajTak #MannKiBaat #Bancroft #EarthHour #Mayawati #YONObySBI
Investing is worship? pic.twitter.com/eeLsYF0nqx
— Mr. Equity (@MrEquity0) March 24, 2018
So the sensex has gone from 36-37k to 32.5k. How many"experts" saw it coming
— Harsha Bhogle (@bhogleharsha) March 23, 2018
— lokeshwarri sk (@lokeshwarri) March 23, 2018
— Mangalam Maloo (@blitzkreigm) March 19, 2018
Meltdown in stock markets is coming, sell on rallies: Ashwani Gujral
We saw a few days ago that Ashwani Gujral has raked in mammoth income of about Rs. 2 crore in FY 2017-18.
He has revealed details of how he made the income and also given particulars of his margin money requirements and risk management strategies.
Earning such high income is quite commendable given that most fundamental investors are in a poverty-stricken state in FY17-18.
Even technical analysts appear to be in the doldrums given the silence from their front.
Prima facie, the hefty income suggests that Ashwani Gujral is able to correctly read the technical charts and predict the movement of the markets.
His latest tweet is quite chilling to say the least.
“Get ready for a meltdown in all markets, a sprint towards 9500 on nifty at least. All rallies remain a sell. S&P 500 on script!!!,” he has warned in a grim tone.
A slump of the Nifty to 9500 means a 5% fall.
It is obvious that individual stocks will plunge more.
Mid-caps, small-caps will be most affected.
Micro-cap stocks will get slaughtered.
Get ready for a meltdown in all markets, a sprint towards 9500 on nifty at least. All rallies remain a sell. S&P 500 on script!!!
— Ashwani gujral (@GujralAshwani) March 24, 2018
Overnight-> USD weak & wobbly. Equities continued fall, yields rallied. Stocks continue move from Thurs, close near lows of the day. Dow -1.77%, SPX -2.1%, Nasdaq -2.4%. SPX now touching the 200-dma at 2585, from where we bounced off early Feb. #DowJones #Markets
— Prashant Nair (@_prashantnair) March 24, 2018
Other technical experts appear to be endorsing this viewpoint though their commentary is not very intelligible.
Trade Wars will not lead to a Bear Market: Shankar Sharma
Shankar Sharma has been providing us valuable guidance from time to time on what our strategy ought to be.
A few days ago, Shankar counseled us that stock market corrections offer “great buying opportunities” if we can find stocks which are debt-free and have robust earnings opportunities. He called it the “investing mantra“.
Investing Mantra: "Unleveraged balance sheet+intact earnings growth+stock price down 30%+ = Great Buying Opportunity": Shankar Sharma, 1973
— Shankar Sharma (@1shankarsharma) March 8, 2018
He also confidently assured us that the correction is “normal” and “marks the start of a massive relative bull market in Emerging Markets”.
I am absolutely clear: this isn't a 2008 repeat. This is nothing but a normal correction of a vastly overbought equity market globally. And this also marks the start of a massive relative bull market in Emerging Markets vs Global Equities. Yaad rakhna…
— Shankar Sharma (@1shankarsharma) February 6, 2018
(Samir Arora & Shankar Sharma uncork the bubbly to celebrate)
Now, Shankar has been at pain to allay our fears that the trade war between USA and China will lead to a prolonged Bear Market.
Shankar explained that for a Bear market to occur, four circumstances have to be present simultaneously.
There must be:
(i) a build up of “massive debt”,
(ii) stock valuations must be driven by euphoria despite the absence of fundamentals, earnings or cash flows,
(iii) There must be “massive speculation” with all and sundry buying stocks;
(iv) there must be a major macro or economic crisis on the horizon which sparks fear amongst the populace.
None of these conditions are present today and so there is no risk of a Bear Market, Shankar has confidently declared.
SPX 19 year return ( previous high): 4% CAGR. Nasdaq: 2% since 1999. Oil still 60% away from Highs. EM & India still below 2007 all time highs ( dollar terms). Nikkei way away from Highs. Europe lower than 2007. Where is the Bubble, that Bear Markets start from?
— Shankar Sharma (@1shankarsharma) March 24, 2018
IMO, bear markets happen when 1. Massive Debt build up. (2008) 2. Zero fundamentals, zero earnings or cash , crazy valuations (2000) 3. Massive speculation. ( Japan 1990) 4. Major macro crisis. ( Asia 97, Latam 80s). Which conditions are present today?
— Shankar Sharma (@1shankarsharma) March 24, 2018
It is obvious that we have to play the balancing game now. We can’t go out with all guns blazing given the reality that the correction may be deep and long-drawn. At the same time, we need not cower in fear and hide in the bunkers. We can buy small bits and pieces whenever the cuts are deep and build a long-term portfolio of high-quality stocks!