6 Signs Stock Market Edging Towards Severe Correction

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Investors, brace yourselves. Databrick’s announcement of a steep drop in GPU prices is echoing through the market, and UBS adds to the caution with reports of NVIDIA GPU lead times substantially reducing. Despite these ominous signals, UBS has raised its price target. The media is catching up to a concerning practice by Nvidia – boosting sales through shell corporations, a strategy eerily reminiscent of the Dot-Com bubble.

Lawrence H. Summers, former U.S. Treasury Secretary, has given a 15% chance of the next move being an upward shift in interest rates. The Federal Reserve faces delicate decisions ahead. In New York City’s commercial real estate (CRE) sector, maturing debt for rent-stabilized buildings poses a challenge. As loans refinance and rent increases lag behind operating expenses, massive haircuts on new loans become inevitable.

A notable example is a $149.2 million CMBS loan for a 665,592-square-foot office property in Jericho, New York, which has missed its January 2024 maturity date, now in the hands of a special servicer. Real estate magnate Barry Sternlicht predicts a $1 trillion meltdown in the office sector.

Automotive distress adds to the economic puzzle, with new car inventory surging by 194% in just 30 months. The yield curve steepens at an alarming pace, signaling a potential full-blown recession by year-end. Bankruptcy filings are accelerating, raising concerns that a breaking point is on the horizon.

Investors, be vigilant as these red flags paint a concerning picture for the stock market’s stability.

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Sources:

https://www.bloomberg.com/news/articles/2024-02-16/summers-sees-meaningful-chance-next-fed-move-will-be-a-hike?utm_source=website&utm_medium=share&utm_campaign=twitter

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