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📈We really did hit peak stupid': Elite investors on #WallStreet say privately that the #market is about to undergo a cataclysmic shift — and many won't survive the 'washout' (Sources: Business Insider Twitter & Writer: Linette Lopez) —••• 📌None of this is my own thoughts or ideas. And I am no expert —•••• 📍Creatively sharing content —-•• 🔆Before the #pandemic, the most pressing problem for #centralbanks was the recovery from the #financialcrisis. The Federal Reserve kept #interestrates historically low to encourage banks to give out loans and juice the economy. 🔅A side effect of making #money easy to borrow, Lopez writes, was that all kinds of garbage ideas could get funding and all kinds of garbage companies could stay in #business. 🔅And that was before millions of Americans jumped into the market via Robinhood and other #tradingapps. 🔅Awash with capital, companies — especially in #tech — saw their valuations leave Earth's atmosphere and make a home somewhere on Saturn, Lopez says. 🔱But now, the #Fed is likely to raise interest rates multiple times in the coming year to fight #inflation. 🔱That means investors will start taking a closer look at how companies generate cold hard #cash — not in 10 years, but over the next several #quarters. 🔱It also means that all those hot meme #stocks, #spacs, and growth stories either need to prove their current business is worth those sky-high #valuations, or be washed out with the market rout. 🔱We have a long way to fall, Lopez says, but this isn't like 2008 when the #collapse of the #economy pulled the #stockmarket down. 🔰This time the problem is the stock market and its unrealistic valuations. And this time, no one’s coming to save the stock market, Lopez says. 🔰There are no more #stimuluschecks, no more Fed puts, and — based on the failure to pass the #BuildBackBetter plan — no more major cash infusions coming from the federal government. 🔰Inflation is running at 7% right now, the highest level since the early 1980s. 🔰When left unchecked, inflation can create an economically ruinous and socially #destabilizing 🌀 spiral, and most people agree on the need to prevent that. ♻️The Fed really wants you to know that it has all the #tools it needs to curb inflation. And that’s true, technically. But these tools could create a #disaster — one that would be even more catastrophic due to the Fed’s own #policies over the past 12 years. ♻️Usually, asset #bubbles pop 🎈up in certain segments of the economy, like housing 🏠. But #traders are worried that the scramble has pushed so much money into #riskyassets that the bubbles 🎈are everywhere at once. ♻️That's the source of the Fed's current dilemma. One of the Fed's main jobs is to control how much money is sloshing around the economy. ♻️Between late 2008 and mid-2014, it injected #3trillion dollars into the system. At the same time, in an unprecedented move, it kept 🤷🏾‍♂️ interest rates pegged at zero 🔆This approach means that all sorts of investors — from average Americans saving for retirement to complex hedge funds — have scrambled to earn what they need by putting their money into riskier investments. 😕This, in turn, created the "everything bubble."🎈🎈🎈
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