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Don't Look Up: Stock Market Denial

01/27/2022 | 09:56am EDT

Netflix aficionados will have, at a glance, seen the reference to the latest hit movie from the streaming service. Without spoiling the film for those who have not seen it or who are on a spiritual retreat, the two scientists played by Leonardo DiCaprio and Jennifer Lawrence discover that a meteorite is about to destroy the Earth and try to warn humanity that the world is about to disappear.

We can easily extrapolate the content of the film to the current state of the financial markets, where chaos, uncertainty, anger and exhaustion reign in the corridors of the stock market. Is Planet Wall Street about to be blown up by the bear-comet?

Don't look up. It's happening right under your feet. -15% in 1 month for the Nasdaq and -30% for bitcoin over the same period against the backdrop of runaway inflation and the tightening of the Federal Reserve's monetary policy. Is the end of an exceptionally bullish period in the markets in sight? What if we are too optimistic about the growth outlook? It is clear that the beginning of the year has been turbulent, not to say cataclysmic.

With one of its worst kickoffs in over a decade, not even the Nasdaq stalwarts have been immune to the derailment. Apple, Amazon, Tesla, Meta, Netflix among others got blown up in flight. The collapse marks a sharp turn in market sentiment from the past few months, when factors such as excess liquidity resulting from pandemic stimulus policies helped tech stocks shatter all-time records. Bitcoin is also stepping into the breach.

The digital currency, being naturally smaller, more volatile, and even more sensitive to macroeconomics than stock indices, has had much of its performance of the past year eaten up. It has shed half of its value in two months, since its all-time highs in November 2021. The cryptocurrency market has already experienced long falls several times in its short history. Will history repeat itself?

After a period of prosperity on financial markets, where the profit margins of tech giants have exploded and where crypto-nft-blockchain solutions have proliferated in the commercial and consumer sphere, are we on the verge of profit extinction? Is the bear-comet arriving quicker than expected?

By Amandine Victor

 


ę MarketScreener.com 2022
Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. 4.11% 2307.37 Delayed Quote.-30.80%
APPLE INC. 2.54% 149.24 Delayed Quote.-15.95%
BITCOIN (BTC/EUR) 0.90% 28849.4 End-of-day quote.-31.36%
BITCOIN (BTC/USD) 1.86% 30392.1 End-of-day quote.-36.33%
META PLATFORMS, INC. 1.29% 202.62 Delayed Quote.-39.76%
NASDAQ COMP. 2.76% 11984.52 Real-time Quote.-23.40%
NETFLIX, INC. 2.17% 190.56 Delayed Quote.-68.37%
S&P 500 2.02% 4088.85 Real-time Quote.-14.21%
TESLA, INC. 5.14% 761.61 Delayed Quote.-27.93%
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