Yesterday’s big market sell off was hardly a surprise. With an economic incompetent (to put it mildly) and his sycophants interfering big time in global trade and discharging the whole magazine of his revolver into the foot of the USA, it was eventually going to get through to investors, however MAGA they might be, that there coud well be a recession in the USA.
It has become fashionable to suggest that the markets are permanently propped up by the huge sums in index tracking ETFs and funds and also the personal wealth of the billionaire set. A further argument in favour of the market being a one way bet is that asset allocation decisions are more commonly made by algorithms than by humans these days. Those are valid arguments, in my opinion, but they have an extension: when entities (be they people or machines) are in control of very large amounts of money in the equity markets, if they are triggered to a negative inflection point, the sell off will be dramatic.
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