Global Economic Slowdown: Is the USA on the verge of a Stock Market Crash?
Is the Global economic slowdown about to push the USA into a deeper recession?
This week we watched as US politicians attempted to come to an agreement regarding a "slight" problem with their nations debt. At the same time the stock market saw a losing streak chillingly similar to that of 2008.
The S&P 500 suffered a steep drop in price rivaled only by October 2008 at the peak of the credit crunch. The DOW Jones Industrial average erased all of its 2011 profits in one day, down 4.31%, over 500 points. Debt deal or no debt deal, investors are worried by the ever growing evidence of a global slowdown. There are too many negative factors affecting the stock market.
We have seen manufacturing growth figures on a global level decrease, from the UK, USA through to China. Consumer spending in the USA (which accounts for 70% of their nations economy) declined in June. Japan's earthquake disaster in March this year has also caused a "knock-on" effect to the global market. Let's not forget the ever lasting unrest in the East. We are in troubled times and it is not about to get any easier.
Bloomberg's Richard Yamarone recently stated that over the last 60 years, when US GDP growth has fallen below 2%, a recession has almost always followed. Analysts are telling investors to throw caution to the wind regarding the stock market.
"Gold merely bent down to tie it's shoe laces"
The usual safe havens in troubled times are living up to expectations. The Swiss Franc has showed enormous strength against the US Dollar. Gold however, the ancient store of wealth (and hedge against a financial crisis), is still the most popular safe haven. The Gold Price did decline this week but closed on Friday in the green. Gold merely bent down to tie it's shoe laces.
The Swiss Franc against the US Dollar
QE3, QE4, QE5, qe6........
What can further quantitative easing do for the US economy? "Not much", finance gurus believe. Further stimulus may prop the stock market up for a little while longer but the bigger picture shows climbing commodity prices and "Mammoth" debasement of the US Dollar. This coupled with government cuts can only lead us into darker times.