The fall of Wall Street knows no respite. Even yesterday was a day to forget but the collapse of Apple and all the consequences of the Chinese slowdown are just the tip of the iceberg. And the results can be seen: the escape from the Stock Exchange is there for all to see.
Over 75 billion dollars burned in December alone. This is the outcome of the flight of capital from Wall Street equity funds: a retreat so hasty and massive that it has no precedent in history since these data were collected. Even if there was a recovery in the days following Christmas, 2018 closed with losses of 5,6% for the Dow Jones index and 6,2% for the Standard & Poor's 500 index. That is, the worst annual performance since that Annus Terribilis which was 2008 and which then gave way to recovery, starting from spring 2009, with the S&P 500 index which has gained 250% to date.
among the warning signs for investors: flattening of the yield curve (when the long and the short term pay similar interest often signals an impending recession), the strength of the dollar crushing the foreign profits of multinationals, the possibility of a decline in corporate profits in the first half of the year. Plus the big unknown about the Federal Reserve's rate hike (markets are expecting a pause in rate hikes and that would be bad news in a way, insofar as a change in the Fed's program would be the admission that the US economy is slowing down) and the evolution of trade tensions between the US and China.
Looking from the American economy to the world economy, a worrying figure published by the Wall Street Journal is that elaborated by the Institute of International Finance and Citigroup, on the increase in total debt. If public and private debts are added together (including households and businesses), a world total close to 250 trillion dollars, i.e. 250.000 billion, is reached. That's triple the level we were at twenty years ago. Despite much talk of excessive debts in emerging countries such as Argentina, Turkey, Pakistan, the bulk of the debts remain concentrated in the old industrialized countries plus China. To be precise, in this order: the United States, China, the Eurozone and Japan accumulate more than two-thirds of global debt, three-quarters of corporate debt, and 80% of sovereign debt.
