Since 2008, the world economy has not encountered large -scale shocks (with the exception of serious drawdown during the Covid period).

However, even after a rapid fall, stock markets recovered almost instantly. And for the US economy, the golden era of incredible profitability came.

Since 2010, the total profitability of S&P 500 was 357%. For the past 12 years, investors have practically not worried, being in a continuous bull trend. Soldering was a rarity, and when they happened, the purchase on the fall was an extremely profitable strategy.

Since 2010, there have been only 3 S&P 500 drawings (exceeding 15%). And each time the market quickly recovered to new historical maximums.

Therefore, many ask: why should we worry now, because the current drawdown is not something special?

Every time the market fell, the US Federal Reserve has settled to protect the stock markets. But after many years of monetary abuse (especially after March 2020), the Fed forces dried up.

The Fed has a problem that she has been faced since the beginning of the 80s-strong inflation. To combat this problem, they need to raise bets and reduce economic assistance.

Everything suggests that the era of easy money should have ended sooner or later, and now the market should learn to survive without the help of an almighty Fed.

This assumption caused the sale of epic proportions in speculative growth shares (for example, Zoom shares suffered huge losses - from October 2020 they decreased by 85%).

But looking only at the S&P 500 (a stock index, which includes 505 shares of the US stock exchanges, it is difficult to say how bad everything is. It decreased by only 16%. If the market collapses, why does the most important index are on a stable level?

Many analysts believe that Apple is holding the market - this is the only organization that restrains an index spiral of epic proportions.

If Apple goes down, the same fate is waiting for the market. And while her recent reports were well perceived by most analysts, concern about their validity is growing.

Large banks predict, saying that this crisis is not a matter of one day or a week, most likely, the situation will develop slowly and gradually gain momentum.

Chief Economist JPMorgan:

It is expected that during 2023 the Fed will increase the rates several times. The dollar index can jump to record levels.

A more valuable currency makes imports cheaper, and export is more expensive and less competitive in world markets.

For American companies, more difficult times are coming for the sale of goods abroad. And the Fed constantly raises bets, which affects a wide range of financial sectors.

US mortgage rates have already exceeded 5%. If they continue to grow, then the housing market will be stalled, since the availability will drop sharply.

Fear of stagflation was covered by the market. Stagflation is a set of recession and inflation. The rise in prices is already painful, but now high unemployment and its constant growth are added to this.

At the last meeting of the Fed, Jerome Powell, said that he did not even think about increasing bets by 0.75%. Some understood this as an inability to cope with inflation.

Next week we will get the value of the consumer price index, which will form the future of the market.

If inflation continues to rage, the Fed must make a difficult choice. What they must do looks obvious and simple. They should bring down the economy, or inflation will get out of control.

It seems that soft landing plans come to naught, and an almost insoluble task faces the head of the Fed - how to come up with a solution with a short -term effect in order to save the economy from a long -term disaster.

For today, thanks for your attention!

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