Panic reigns everywhere, shares collapse, cryptocurrencies lose their positions, and interest rates have grown to heaven.

Today we will discuss the latest data that testifies that the most sad scenario that any investor is afraid of us can wait for us.

The S&P 500 index fell by about 21% from the maximum values ​​in December 2021. Such a negative trend occupies 14th place in anti-rating in the history of the United States.

Perhaps this does not sound so terrible, but we must not forget that this is one of the first cases of the collapse of the market, when at the beginning of the fall the key rate of the Fed was almost 0 levels.

The previous 40-50 years, the solution of similar problems on the market was simple-the Fed reduced the rate, the economy was restarted, and the markets came to life.

The Fed has always played the role of a doctor who prescribed drugs that stimulate the economy so that it overcame the collapse and began to grow again with an accelerated pace. But over the years of such treatment, when the government abused the fall of money and zero interest rates, side effects appeared.

You probably already noticed that inflation has grown. Due to the Fed’s policy, the inflation rate in the United States is 8.6%, and if the 80s scenario is repeated, inflation will reach 17%.

The Fed may well resort to the old methods of saving the market, namely again to reduce the interest rate to 0 and introduce a number of programs to increase the money supply.

But this approach will no longer work, because it will only aggravate already high inflation. And, perhaps, it will lead to the worst scenario - hyperinflation. It is now bothering all investors.

Many dummy companies that have received financing at the expense of helicopter money in past decades will gradually bankrupt. However, the number of zombie companies is growing, which have enough money to continue to work and serve their debt, but which are not able to pay off the debt.

For example, look at Revlon shares - a giant in the decorative cosmetics market. They recently fell 95% after the management announced bankruptcy.

If you look at the latest reports on the company's income, it will become clear why this happened. Debt service costs significantly exceed cash receipts. That is, the company does not have enough money to pay interest on loans, not to mention the principal amount of the debt.

If interest rates will grow against the background of such a negative trend, companies as Revlon will be even larger. This will not end with anything good for the US economy.

Many companies regularly make forecasts about the prospects for the development of their business in the near future. And if the company makes adjustments to its forecasts during the year, then this is a very disturbing sign.

And recently, Target (one of the largest retailers in the USA) revised its income forecasts, suggesting that they will decrease by 60%. This happened just a few weeks after the report of the report for the 1st quarter of 2022. And there are more and more such.

The way the economic storm about the upcoming recession is approaching the United States, many factors testify, and all this happens against the background of the continuing increase in prices.

The most striking confirmation of this is oil. The price of raw materials has almost doubled compared to last year.

Oil is involved almost everywhere. It is used in the production of plastic and textiles, as well as in the food industry. In fact, this is the basis of the global economy. Gasoline, kerosene and diesel fuel are used in the transportation of everything that we produce and transport.

Raising oil prices by 2 times is a dangerous situation, and history confirms this. If we analyze historical data, then every time the oil price increased by 100%, a recession occurred within 1 year.

So it was in 1990, 2000 and in 2008. Now we are close to exceed the record mark of 2008 ($ 146).

Also, the indicator, which is the main harbinger of the recession, began to cause fears back in April 2022.

The difference between the profitability of 10-year and 2-year treasury bonds has always very accurately reflected the approach of difficult times.

Almost every time this indicator was below 0, a recession soon came. And on April 1, the profitability was negative within 36 hours. And after some time we have already observed a negative growth in GDP and a decrease in market activity.

The difference between the profitability of these bonds falls again. And soon it may again be negative - this is an unfavorable trend that once again proves that we are approaching a recession.

The new crisis will be much more serious than just a recession? Perhaps this will be a massive collapse, as in 1929. But first we must recall something from the story. The 1929 crisis cannot be compared with any situations that have been happening on the market over the past 100 years.

Yes, during this time there were other recessions with the massive use of borrowed funds, but there was not a single event that would lead to a decrease in the Dow Jones index by 90%.

If you invested money during the peak growth of the index in 1929, then you would have needed 25 years to return your funds.

The great depression of 1929 forever changed the financial world, and the Americans remembered it for several more decades. And the worst of all, the government did not intervene and did not come to the rescue.

By 1933, almost half of the American banks closed, 15 million people were unemployed (30% of the total number of labor).

The US economy truly overcame the consequences of this crisis only by the beginning of the 2nd World War.

So, we will summarize, we see that this time the state cannot extend the hand of assistance to the economy, which is mired in speculation, quick money and loans.

It seems that this huge soap bubble will soon burst, and that the economic disaster is inevitable.

For today, thanks for your attention!

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