The stock market exposed a kink in its armor when the Coronavirus fear hit the markets and caused some major indexes to spiral downwards by 30% and more in some cases.
Now over a year and a half later, the stock market rebounded from the COVID dip.
However, we are still facing many threats, which could all very likely send the stock market crashing down, perhaps to lower lows than visited in 2020.
Here are a few factors from DataTrek Research suggesting that the next market crash could be just around the corner.
- Rising inflation
The average “healthy” level of inflation is said to be around 2%, according to the Federal Reserve.
Currently, we are wavering at about 5.4% inflation levels, a much higher rate above what the Fed considers to be a safe zone.
DataTrek Research co-founder Nicholas Colas has pointed out that the recent rapid rise in housing prices could have a larger effect on next year’s inflation readings, much bigger than individuals realize.
For inflation to no longer be one of the most significant catalysts driving the fear of a possible market collapse, considerable measures have to be implemented before it spirals out of control.
- Cryptocurrency crash
The cryptocurrency market cap has been hovering around $2 trillion for some time and is a sector that, as we all know, is quite volatile and unpredictable.
Although this is indeed one of the overall smaller markets, $2 trillion is certainly enough to cause an impact on other markets, and potentially trigger a stock market crash.
A big enough sell-off in the crypto market by inexperienced traders could quickly spark a chain reaction causing a fear sell-off in the traditional market.
- Natural Gas
While our gas situation in America isn’t as low as a year ago (our gas prices are up nearly 50%), other countries like Europe are facing natural gas and power shortages just in time for winter, driving energy prices to record-breaking levels.
Bloomberg reports that the world is likely to learn how much the global economy depends on natural gas.
Unfortunately, for American citizens, the incentive for companies to ship natural gas overseas due to premium markups is about twice what it is selling for here in the states.
If similar activity continues, the price of gas in the states could increase by another 100% and raise the risk of stagnation; high inflation, low growth.
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