Worst start to the year for stocks since 2008 pic.twitter.com/OJpvx9FpDo
— zerohedge (@zerohedge) January 5, 2024
The global stock market is off to a rocky start in the new year, experiencing its worst performance since the financial crisis of 2008. As concerns mount and comparisons to the tumultuous year of 2020 arise, investors are bracing for a potentially volatile period ahead.
Analysts are drawing attention to a historical anomaly, noting that the current situation resembles the challenges faced in 2020. There’s a growing sentiment that the next 45 days could see a surge in market activity, reminiscent of the frenzied trading seen during the unprecedented events of the previous year.
Adding to the unease is the fact that the United States is grappling with an economic landscape that hasn’t been witnessed since 1945. Annual inflation, as measured by the Consumer Price Index (CPI), is on a rare trajectory. Never before has inflation fallen from above 5% to below 3% without a corresponding recession at the time of the decline or within the subsequent 18 months.
Remarkably, financial markets appear to be optimistic about the prospect of a “soft landing,” despite historical data suggesting a challenging economic environment. This divergence between market sentiment and historical patterns raises questions about the sustainability of the current market exuberance.
In the United States, the Institute for Supply Management (ISM) Service Employment data has delivered a significant downside surprise, pushing the indicator into contraction territory. The unexpected contraction in service employment raises concerns about the broader health of the economy, particularly given the crucial role that the services sector plays in the nation’s economic activity.
As uncertainties loom and economic indicators paint a mixed picture, investors and analysts alike are closely monitoring developments in the coming weeks. The intersection of economic data, market sentiment, and historical trends creates a complex landscape that will likely shape the trajectory of global markets in the months ahead. The question on everyone’s minds: Will the current market turbulence lead to a repeat of the challenges witnessed in 2020, or will the markets navigate these uncertainties with resilience? Only time will tell as the financial world braves this period of heightened volatility.
'Never since 1945 has annual inflation, measured by CPI, fallen from above 5% to below 3% without a recession at the time of the fall or within the subsequent 18 months. Yet financial markets are rejoicing at the prospect of such a "soft landing".' t.co/fphDVc9aYA pic.twitter.com/PgfLgEuBWl
— Jesse Felder (@jessefelder) January 5, 2024
United States ISM Service Employment – Huge Downside Surprise Into Contraction Territory