Why the stock might get worse for us

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One of the many prominent things about the ongoing strikes in the American stock markets is that US government bonds do not pick up the recession. This is not a good sign.

The cabinet is usually the yen for yang shares. When stocks take great success, bonds jump in general while investors flow to safer beaches. It is known as the “risk -free” origin after all. This is a mechanism that helped many various contracts over the decades, with only rare exceptions.

In the fast stock market for this month, however, the budget law does not work completely. American stocks are divided into monsters, a decrease of 5 percent this month so far, and we are only in mid -March. We have decreased by 8 percent since mid -February. At the same time, bond prices have risen throughout this year, but not significantly. It is important, that the normative American government bonds for a period of 10 years at the same level as they were at the end of last month.

This tells you that this is an emotional shock. It is not the economy, stupid. This makes it difficult to fix. Data related to the American economy is volatile but not terrible, and certainly not ugly as the markets suggest. American inflation Loving to 2.8 percent In February, a sign that the economy is a little weakening but not tanks.

But this is not really the investors. “We sell American assets and we are talking,” Michael Strubic, chief investment official in Swiss, told me, Lombard Audier, told me on Friday morning. “We are going through the Valley of Pain now.” This is completely switching in display. This time last year, Strubik was talking about “”GeostrateGic“The necessity of buying and contracting American stocks. At the beginning of this year, it was still universal for the exceptional American.

the American economy He did not change his opinion. Instead, this was what the Vice President called the “final provocation” of the Vice President of JD Vance for Europe in his speech to the Munich Security Conference in February. Then Donald Trump was the wonderful treatment of Ukrainian President Volodimir Zelinski at the White House a few days later. Then it was the threat of American definitions against Mexico and Canada. “It is quite clear that they are hitting this agenda with a heavy hammer,” said Strubic. It is now retreating from stocks to bonds and cash instead.

At some point, the continuous disposal of the tariff policy from the Trump administration will harm the real economy. The wealthy Americans are highly exposed to increasing stocks quickly, so this will hit them in the pocket. Companies will retreat to spending, if they occur with a random and painful policy. More worrying to investors, uncertainty makes it very difficult to make profits predictions with any conviction, and leave the box managers Fly.

The mood is horrific. Trefor Gresham, head of multiple assets in the Royal Assets Management of the United Kingdom, indicated that in the tracing of feelings, which was going throughout 1991, it ranks first in the past few days in the fifty in the market that he noticed. This period starts directly from the days (or down, I think) with entertaining rings such as Lehman Brothers, the euro crisis, and one for financial lovers here-the removal of a long-term capital hedge management fund in 1998.

Again, Greetham indicates, it is not the economy that harms here. They are definitions, political geography, the same uncertainty that harms. And “central banks do not exist for you.” In other words, the federal reserve will not be installed to the rescue as it did, for example, the Kofid crisis five years ago.

If investors believe that the Federal Reserve will wander in a white horse to reduce prices and repair chaos, the bonds will be significantly stronger than they are today. Instead, investors look forward to a slower growth, and the high future inflation that monetary policy cannot easily repair.

This does not leave any short -term catalyst to convert this position. With the exception of the character transplant of the American president, or from an adult person in the room or a sudden crash in the real economy that raises discounts in the enormous federal reserve, there is nothing to stop rot. “We are in the land of falling knife,” says Gresham.

Treasury Secretary Scott Payet refused the impact of “small fluctuations” on stocks. White House message is short -term pain for long -term gains. Wall Street heavy from Goldman Sachs and Blackstone this week Praise the potential aspects Of the beloved definitions Trump. I will take everything they have.

Even if the administration wants to pressure the Federal Reserve to make discounts, this will be shown by investors as inappropriate intervention in the independence of the central bank, which may make things worse.

Everything has a price, and it is temporary in extensive declines equally on the course. At some point, American stocks may become cheap enough for the virgin in the fishermen. But at a price of 24 times, compared to 17 in Europe, it is difficult to say that we are yet. Fund managers are left with a little reason for optimism. Perhaps American investors will not notice Trump’s proposal A 200 % tariff On the right French champagne after all.

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