by Michael Snyder, The Economic Collapse Blog:
In less than one year, 46 trillion dollars in financial wealth has been wiped out. If that isn’t a “crash”, how would you define one? Since last November, stocks and bonds have been plunging all over the globe. When there is a good day like we saw on Monday, sometimes that can fool us into thinking that everything is going to be okay. But in order to understand what is really going on we need to step back and look at the bigger picture. And when we look at the bigger picture, it becomes exceedingly clear that we are in the midst of a historic worldwide market crash. According to Bank of America, a whopping 46.1 trillion dollars in financial wealth has already been wiped out since last November…
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It’s been a tough year for investors, with global stock and bond markets erasing $46.1 trillion in market value since November 2021, according to Bank of America.
The massive drawdown has led to forced liquidations on Wall Street, the bank’s chief investment strategist Michael Hartnett said in a Friday note, highlighting the recent break below 2018 support in the NYSE Composite Index.
When I first came across that number I could hardly believe it.
But it is accurate.
Stocks have been falling and falling and falling, and Bank of America is warning that this is one of the worst global bond market crashes that we have ever seen…
Analysts at BofA liken it to going “Cold Turkey” and blame it for causing the third “Great Bond Bear Market.”
They calculate the 20% plus losses suffered by government debt investors over the last year are now a par with the post World War I and II years of 1920 and 1949, and the Great Depression rout of 1931.
The combined collapse in global stock and bond markets means global market capitalisation has been slashed by over $46 trillion.
That is an amount of money that is difficult to comprehend.
The total value of all goods and services produced in the United States last year was approximately 23 trillion dollars.
So we are talking about an amount of money that is roughly twice as large as our GDP for an entire year.
When the Federal Reserve and other central banks around the world took the punch bowl away, it was obvious that something like this would happen.
Central bank intervention pushed global financial markets to absolutely absurd levels, and there was no way that they could remain there once the artificial support was removed.
Here in the United States, all of the major stock indexes have fallen for three quarters in a row, and tech stocks have been leading the way down…
The S&P 500 Index closed on Friday at 3,586, down 25.6% from its intraday high on January 3, and where it had first been in November 2020.
The Russell 2000, which tracks small-cap stocks, is down 31.8% from its high on November 5, having thereby maintained its function as early warning signal.
The Nasdaq closed at 10,576, down 34.8% from its intraday high on November 22, the very day Microsoft CEO Satya Nadella dumped 50.2% of his Microsoft stock in a bunch of frenzied trades, totaling $285 million. On the list of best-timed insider trades ever, he must be at the very top. Since then, Microsoft shares have plunged 33.4%, to $232.90, the lowest closing price since March 2021.
As I discussed a few days ago, the wealthiest tech tycoons have collectively lost 315 billion dollars over the past year.
Ouch.
The Federal Reserve giveth and the Federal Reserve taketh away.
The same thing is true for the housing market. Fed policies created the largest housing bubble in our history, but now that bubble is bursting.
In fact, it is being reported that we just witnessed “the largest single-month price declines” since the last financial crisis…
… today Black Knight confirmed that the US housing market has turned decidedly ugly with the two biggest monthly declines since the global financial crisis.
According to a Monday report from mortgage-data provider, median home prices fell 0.98% in August from a month earlier, following a 1.05% drop in July.
The two periods marked the largest monthly declines since January 2009. In fact, at the current pace of declines, we may soon see a record drop in home prices, surpassing the largest historical slide hit during the global financial crisis.
The report noted that July and August 2022 mark the largest single-month price declines seen since January 2009 and rank among the eight largest on record.
If the Federal Reserve does not reduce rates, things will soon get really, really ugly for the housing market.
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