Latest news with #BlackTuesday
Yahoo
14-05-2025
- Business
- Yahoo
Viktor Gerashchenko, governor of Russia's bank who was dubbed ‘the worst central banker in the world'
Viktor Gerashchenko, who has died aged 87, was a gruff Soviet-era central banker who in 1992 was appointed to head the Russian central bank under the country's first post-Soviet president, Boris Yeltsin; however, his insistence on recklessly printing roubles, and the cheap credits he handed out to weak Russian banks, fuelled hyperinflation in which millions lost their savings, earning him the sobriquet 'the worst central banker in the world' from the Economist magazine. Gerashchenko's support came mainly from the old nomenklatura who saw him as holding the line against reformers in the Yeltsin administration. It was all very well, Gerashchenko remarked, for reformers to fall back on 'hackneyed quotations from Western textbooks on macroeconomics,' and he denied any link between the bank's overheated printing presses and rampaging inflation, which he claimed was caused by insufficient production. Effectively confirming administration charges that he was running his own economic and social policy, he observed that the bank could hold inflation to nothing, but only at the cost of 'unrestrained unemployment and the absence of social safeguards for the jobless'. Therefore, it chose to print more money. Gerashchenko was fired in October 1994 after the rouble lost about 30 percent of its value in one day – 'Black Tuesday'. While a few pundits remained hopeful that Russia might still build the foundations of a market-based democratic order, the economy continued to deteriorate under Gerashchenko's three successors, and in 1998, when the country defaulted on its debt, Gerashchenko was called back. Over the next four years, helped by a huge devaluation of the rouble and high oil prices, he was credited with presiding over an economic recovery in which the rouble stabilised againt the dollar, Russia ran a large trade surplus and inflation was kept in check. But the central bank remained unreformed, remaining a byword for pedantic but ineffective regulation and turning a blind eye to the behaviour of the well-connected, while running a murky web of foreign subsidiaries. In March 2002, with Russia now under President Vladimir Putin, Gerashchenko resigned from the bank. In 2004 he became chairman of the board of the oil company Yukos, which had been acquired from the state by the Russian oligarch Mikhail Khodorkovsky in the mid-1990s. By the time Gerashchenko arrived, Khodorkovsky was awaiting trial on charges of fraud, though his main transgressions appear to have been his outspoken criticism of the Putin administration and his political ambitions, 'crimes' which saw him imprisoned for a decade and eventually forced into exile. Gerashchenko claimed to have been appointed as 'a go-between for the Kremlin and Khodorkovsky', but during his time as Yukos chairman (2004-07), most of the company's assets were seized and transferred for a fraction of their value to state-owned oil companies. 'The f---ers nicked it,' he said. Yet Gerashchenko, widely disliked as a Communist-era apparatchik, offered little political threat to Putin. In 2003 he was a co-founder of Rodina ('Motherland') party, a nationalist coalition seen as pro-Kremlin, and was elected to the state Duma. In 2004 the Kremlin was said to have asked him to play the part of challenger to Putin in the presidential elections of that year. Ultimately, however, he was refused registration by the Central Election Commission owing to a technicality. Viktor Vladimirovich Gerashchenko was born in Leningrad on December 21 1937. His father was a leading banker who became deputy chairman of the State Bank, and thanks to his father's connections Viktor rose rapidly in the Soviet banking system. At the age of 28 he became director of the London-based Moscow Narodny Bank the first Soviet foreign bank. In 1982, he moved to work in the Vneshtorgbank, responsible for Soviet foreign trade and in 1989 he became the last chairman of the State Bank of the USSR. According to a US Congressional report, he may have been involved in funding of espionage and terrorist operations. Viktor Gerashchenko, born December 21 1937, died May 11 2025 Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Time of India
01-05-2025
- Sport
- Time of India
Black Tuesday for sporting legends: Ronaldo, Messi, Dhoni, and LeBron all knocked out on April 30
Black Tuesday for Sporting Legends: Ronaldo, Messi, Dhoni, and LeBron All Crumble on April 30 April 30, 2025, will go down as one of the most sobering days in modern sports memory. Four of the world's most iconic athletes—Cristiano Ronaldo, , M.S. Tired of too many ads? go ad free now Dhoni , and LeBron James—each saw their teams knocked out of major competitions in stunning fashion, triggering reactions ranging from heartbreak to harsh public scrutiny. Cristiano Ronaldo: Trophyless Again After Al-Nassr Collapse Cristiano Ronaldo's pursuit of silverware with Al-Nassr came to another bitter end after a 3-2 loss to Japan's Kawasaki Frontale in the AFC Champions League semi-final. Despite boasting 75% possession and fielding stars like ex-Liverpool forward Sadio Mané and former Arsenal midfielder Marcelo Brozović, the Saudi side failed to convert dominance into victory. Ronaldo missed a clear chance in stoppage time and looked visibly distraught post-match, talking to himself and making odd gestures, behavior that raised further concerns among fans. With no major titles this season, frustrations continue to mount for both the star and Al-Nassr supporters. M.S. Dhoni: Return as Captain Ends in Humbling IPL Exit In Chennai, M.S. Dhoni's return to the captaincy couldn't save the . A four-wicket defeat to Punjab Kings at Chepauk marked CSK's fifth home loss of the season and confirmed their elimination from IPL 2025 with just two wins in ten matches, the worst record in the league. The once-mighty fortress of Chepauk now mirrors the decline of a team that has fallen steadily since 2020. Dhoni, 43, stepped back into leadership after Ruturaj Gaikwad was ruled out with injury but couldn't arrest the freefall. The five-time champions were the first team knocked out of the playoffs race, a fall from grace that punctuates the end of an era. Lionel Messi: Inter Miami Humbled by Vancouver in Semifinal Rout Across the Atlantic, Lionel Messi's Inter Miami were thoroughly outplayed by Vancouver Whitecaps in the CONCACAF Champions Cup semifinal. Tired of too many ads? go ad free now A 3-1 loss on the night completed a 5-1 aggregate defeat. Despite Messi's early involvement—threading a pass that led to Jordi Alba's ninth-minute goal—Miami's backline was torn apart. Vancouver's relentless attack exposed Miami's aging midfield and slow defence. Messi had a few half-chances but remained largely peripheral. After the match, Javier Mascherano admitted: 'Although it was the first time the club had advanced to the semifinals, the defeat hurts us a lot.. . we have to accept that our opponents outplayed us.' The loss not only ended Messi's continental hopes but further spotlighted the limitations of Miami's star-powered, yet increasingly sluggish, squad. LeBron James: Lakers' Strong Season Ends in First-Round Heartbreak In Los Angeles, LeBron James and the Lakers were eliminated from the NBA playoffs following a 103-96 loss to the Minnesota Timberwolves. Despite a 50-win season and homecourt advantage, the Lakers were outscored in every fourth quarter of the series. But amidst the disappointment, LeBron found solace in the personal. Sharing the court with his son Bronny James ranked as the pinnacle of his career: 'Number one for sure. That's easy. That's not even close.' Bronny, who split his rookie season between the Lakers and their G League affiliate, showed promise and poise. 'Just pushing through and growing at the same time is something to be proud of,' he said. Lakers head coach JJ Redick was praised by LeBron for his composure in his debut season, despite the early exit. Luka Doncic, recently traded to LA, echoed the sentiment but admitted: 'It's tough to get that chemistry on the court without any practices.' A Day That Marked a Shift April 30 wasn't just a bad day for four sports icons. It was a symbolic reckoning, an inflection point where age, form, and transition collided. The weight of legacies clashed with the brutal demands of present-day competition, leaving fans and critics alike to wonder if the torch has truly begun to pass.
The Market Online
24-04-2025
- Business
- The Market Online
Global Markets, Canadian Politics, and the New Gold Rush
Transcript The Canadian Securities Exchange presents your go-to source for trends in junior and small cap markets each month. Join host Anna Seren and financial expert Bruce Campbell in partnership with Stockhouse. ANNA Hi, my name's Anna Seren. I'm director of Listings Development with the Canadian Securities Exchange. You're joining us for episode three of The Market This Month . The markets have been on edge as the world continues to wake up to daily updates surrounding looming trade wars. What we've witnessed is nothing short of historic: a $10 trillion global market swing over just 10 days. In April of 2025, investors are being reminded of the darkest chapters in market history—Black Tuesday in 1929, the 2008 collapse of Lehman Brothers, the pandemic shock of 2020. And now to that list, we add a new entry: Liberation Day. This latest market meltdown was triggered by President Donald Trump following a series of sweeping tariff announcements over the past two weeks. The fallout has been dramatic. Between April 2nd and April 9th, $10 trillion was wiped from the global markets as investors fled U.S. equities, and most notably, U.S. treasuries. Perhaps the most shocking signal was a mass sell-off of U.S. Treasury bills, long considered the ultimate safe haven. The sudden plunge in both treasuries and the U.S. dollar has raised serious questions about investor confidence and global economic stability. In true Trump fashion, late on Friday, April 11th, he made a surprise announcement: a temporary suspension on tariffs on smartphones and laptop imports—80% of which are sourced from China. This was seen as a partial lifeline to tech giants like Apple, whose supply chains have been deeply rooted in East Asia for decades. While Apple has pledged to move some of its operations back to the U.S., including a $500 billion investment in a massive AI server facility in Texas, most of its international production remains vital to its global strategy. Thank you again for joining us for episode three of The Market This Month . I'm, of course, joined by my wonderful co-host, Bruce Campbell with Stone Castle Investment Management. Thank you for joining me, Bruce. BRUCE Yeah, great to be live again, right? Well, we said we weren't going to talk about tariffs this month, but guess what we're going to do? We're going to talk about tariffs, aren't we? ANNA We pretty much have to. We have to talk about tariffs. Alright, well, let's get into it. Obviously, it's been a crazy month. We just talked about what's happened over the past month. Tell us your thoughts on how this is going to affect the market. I mean, obviously it's a lot of volatility, right? BRUCE We saw the tariffs announced and the market went down by 14% immediately, and then the pause came and the markets rallied back 12% as of the time of this recording. But there's still so much uncertainty as far as what's going to happen. It's a 90-day pause. In the meantime, what can happen? Can there be different tariffs? Can there be more tariffs? That uncertainty is not what most investors like, and so there's going to be more volatility, unfortunately. ANNA And I think when we look at things that have happened in history that have caused these types of fluctuations in the market, usually there's some event that it's surrounding. But this is an event that feels like it keeps happening, and we never know when it's going to change. BRUCE Yeah, and I think Trump is obviously that event. I don't even know if Trump knows what he's doing next, or maybe he does have some master plan. But as an investor, I feel the same fear—what's going to happen next? So I feel like I'm just bracing and trying to hold on. ANNA Is that, do you think, what most investors are feeling? BRUCE Yeah, the fear of the unknown is a big one. How much bluffing and how much art of the deal is involved here, and how much of it is just kind of out of his control? I think most people feel there's a degree of both happening. ANNA And that out-of-control feeling is like, well, what happens if they make a policy error and we hit a recession? What does that mean for the markets? BRUCE If they are able to keep everything in control and all the pieces in place, then we could have had a downturn and perhaps they'll have their great economic policy that they roll out in tax savings, and markets will go higher. But if they happen to misstep and they send the economy into recession—woo, that's a whole other thing. ANNA Okay, so I want to ask you this about the tariffs. Because we hear about it on the news and all the media is talking about tariffs, but I want to ask you from an investment standpoint: how do the tariffs affect our investments? BRUCE Obviously it's going to hurt margin for certain companies on their ability to have bigger revenues and be able to grow. ANNA Is there a downside to this? Is there a potential upside once the tariffs are settled? Is there some kind of benefit or downfall, and how does this actually affect the companies that we're choosing to invest in? BRUCE Most economists that you talk to don't feel that there's really any upside to tariffs unless you're specifically looking at it from the U.S. tax or revenue perspective—it's really a form of tax. Now, looking at it from a company perspective, it's kind of interesting because the companies hit hardest by all this are U.S. companies. Some are affected by tariffs because they have products produced in tariffed regions. Say you're a Canadian company selling into the U.S. and a tariff is put on your product—that's going to impact your margins and potentially your sales. Suddenly your product is 10% higher due to the tariff, so now you have to compete with similar U.S. products. Do you drop your price and lower your margins? Or do you maintain the higher price because your product is better? What's interesting is that some global companies—not U.S. based—have actually outperformed. The market is looking at this from a different angle: that the U.S. may suffer the most. The purchasing power of the consumer is essentially being taken away again. We saw it with inflation, and the same principle applies here. Consumer purchasing power—70% of the U.S. economy—is now impacted because they'll be paying more for goods. ANNA As we discussed in the intro, companies like Apple have operated in East Asia for decades, manufacturing a lot of their products there. Apple has committed to spending $500 billion to establish U.S.-based manufacturing. Is this good for the stock? BRUCE They spent years moving away from China, and now they're being tariffed elsewhere. I suspect they'll get some breaks or find ways around these tariffs eventually. In the meantime, there's going to be a lot of volatility. Apple has come a long way off its high. Consumers want iPhones, and they want them cheap. Apple already said if they moved all production to the U.S., the price of an iPhone would double. Most people don't want to pay that. It's almost a necessity now—everyone has a phone, and everyone upgrades. We're all paying for it. There's got to be a way around that, and they've already announced reduced or no tariffs on electronics. From an investor's perspective, I'd prefer Apple keep the status quo. They've optimized their supply chain for price and efficiency. ANNA Speaking of all this volatility, let's talk about volatility itself. The VIX index is something you look at regularly. As we discussed last time, it's updated throughout the day, right? BRUCE Correct. ANNA The VIX is referred to as the 'Fear Gauge' or 'Panic Index' on Wall Street. On April 7th, it spiked to 60.13. For perspective, during the 2008 Lehman Brothers crisis, it reached 59.89, and during the COVID market panic in March 2020, it hit around 53–54. So this spike topped those major events. What are your thoughts? BRUCE It's the uncertainty—and how dramatically it happened. Portfolios needed to be readjusted to reduce risk, and when they do that, they use options. The volatility of those options spiked. We talked last month about 30 being a high level. We came into the April 2nd tariff announcement at 22. It jumped over 30 and then hit 60. ANNA Unreal. And when that goes up, typically the market goes down, right? BRUCE For the most part. You don't usually have high volatility and a calm, steadily rising market. ANNA We also mentioned the $10 trillion swing in the market over just 10 days. Even if it corrects, someone still sold in that dip—and someone else bought. So there's a change in ownership, and people are getting hurt. That's real, right? BRUCE Absolutely. If you held your stock, it dropped, and you sold—someone else now owns it. If it goes back up, they gain, and you don't. You sold and you lost. ANNA As a fund manager, these must be interesting times. Do you adapt your strategy? BRUCE We don't completely change our strategy, but we become more cautious. We reduce position sizing. If we normally hold 2.5% in a company, we might cut it to 1.5% or even 1.25%. During that first volatile week, we weren't adding anything new. Once the volatility dropped after the pause was announced, we saw some opportunities and started picking away at them. ANNA That's impressive. One thing we also saw—and we'll talk about gold and the U.S. dollar next—was the fear surrounding U.S. Treasury bills. We haven't seen that in a very long time. It's one of the safest havens globally, and this exodus shows a lot about investor sentiment. BRUCE Historically, when stock markets—especially the U.S.—go down, the U.S. dollar and treasuries are bid up. They're considered safe, and the U.S. dollar is the reserve currency. Treasuries are even safer than cash in some cases and currently offer higher yields. But now we're seeing the opposite: stock market down, dollar down, and treasury prices down (which means yields up). That tells me foreigners are selling. They're selling stocks, converting dollars, and buying foreign currencies. They're also selling treasuries and repatriating capital. ANNA And once they pull that capital, they're not jumping back in overnight. BRUCE Exactly. It could have a long-term impact. A lot will depend on future policy. If the U.S. introduces stimulus—tariff resolutions, tax cuts, regulatory changes—the economy might take off, and investors could return. But these capital cycles tend to last. There's a lack of trust now in the U.S. due to the rapid policy shifts. Investors are saying, 'Let me take my capital back and wait.' ANNA I've heard people close to the administration say Trump genuinely believes tariffs are a great way to fund the government. So this may not be a tactic—it could be a long-term strategy. We'll see. I'm sure we'll be talking about it again in episode four. BRUCE Probably. Stay tuned to see what happens next month. ANNA Let's talk about gold prices—something we've followed since the start of the year. Tell us where that's at. BRUCE Gold has been one of the best-performing investments over the last year—up close to 40% in 12 months and about 25% year-to-date. People view it as a safe store of value. Some central banks are also buying. It's been a consistent bright spot during all the tariff-driven market volatility. ANNA And historically, gold has a negative correlation to the U.S. dollar. That's held up recently? BRUCE Yes. Gold performed even when the dollar was strong, but now the dollar has dropped 10% from its high, and gold is accelerating again. If you're a gold investor, this is a great time. ANNA Here's what excites me—maybe I'm jumping ahead—but if gold stays at these levels, gold projects could become profitable. That might spark M&A activity. Can you expand on that? BRUCE Absolutely. Gold is around $3,200 an ounce. The best mines might have operating costs as low as $600–$700 per ounce. Average producers tend to be in the $1,200–$1,800 range. At current prices, they're making solid margins. That means projects that weren't viable at $1,000–$1,500 are now economic, even those approaching $2,000 per ounce in cost. These projects will start to move forward. But building a mine takes time due to regulation and permitting. So for majors, it's often cheaper to buy than build. That's why we could see a wave of acquisitions instead of new development. BRUCE I suspect that if gold stays up here like it is, you'll start to see some of those companies get picked off—especially given that gold's had a fairly strong move, but you haven't seen the producers rise the same amount you would've expected. A lot of the mining stocks aren't back to their highs, even those we saw in 2020 or 2021. ANNA Even though gold is hitting record highs. BRUCE Right. Hopefully that's what we start to see. Hopefully it becomes reflective, and hopefully there's a trickle-down that moves into the exploration world—giving those companies the ability to raise more capital and advance their projects. Usually it eventually gets there. That's my hope for all of them. ANNA Let's talk about something you've brought up a lot over the years we've been doing this—something people don't always think about. You watch investor sentiment closely, but you also wanted to talk about business sentiment. What's going on there? BRUCE With what's happened in the market sell-off, sentiment has really swung from one extreme to the other. We track a few different sentiment indicators. For investor sentiment, we look at the American Association of Individual Investors. They do a weekly review and interview 1,000 people to ask whether they're bullish or bearish on the market. We've actually seen net bears in that survey for the last several weeks, which is interesting. That typically only shows up in very negative markets. Another key indicator we follow is the National Association of Active Investment Managers in the U.S. They report weekly on how fully invested their members are. In normal markets, they usually sit around 80–90%. Under conditions of high volatility, that number drops. Right now, it's around 50%. If you go back to the 2022 lows or COVID lows, that range was between 30–50%, and we're back there again now. Sentiment has really pulled back into negative territory quickly. While there's going to be volatility around policy, historically when sentiment hits these levels, it presents longer-term opportunities. If you're a 3–5 year investor, you'll probably look back and say, 'That was a fantastic time to pick something up.' ANNA And on the business sentiment side? BRUCE That's really interesting too. The National Federation of Independent Business in the U.S. surveys its members. After President Trump was elected, we saw one of the fastest spikes in sentiment in history—only a few other times have we seen a similar rate of ascent. Now, that has reversed. It's dropping off. Consumer sentiment has also dropped significantly. The last reading before this show was 50.8. In 2022, it dropped to 50. In 2008 and during COVID, it wasn't even that low. That tells us consumers are scared. ANNA And for all the talk about this benefiting consumers, people are looking at their everyday goods and realizing those prices may go up 10–20%. That's not comforting after an extended period of inflation. BRUCE Right, and there's also a lot of confusion for consumers. If someone needs to buy a car or a new computer right now, they don't know how tariffs are going to affect their purchasing power. It's changing constantly. ANNA And I don't think many consumers even realize they're the ones paying. The way it's positioned by the U.S. government makes it sound like the producer pays, but it's actually the country slapping a tax on the product. Unless the manufacturer or a middleman absorbs that cost, the consumer pays it. BRUCE Exactly. I saw an article recently about government-subsidized relief being introduced in the UK to help offset those costs. If we start seeing that elsewhere, it could become just as painful in different ways. ANNA Let's shift gears. By the time this airs—and before we speak again—we could have a new Prime Minister. Or we might have the same one. BRUCE Right. We're going back to the polls on April 28th. ANNA So it'll be interesting to see what happens. Whatever the outcome, make sure to get out there and vote. It's really important. BRUCE Absolutely—no matter who you're voting for, just vote. ANNA Let's talk about some CSE news. It's been an interesting month in the markets, but a fantastic one at the CSE. One of the big developments is access to Interactive Brokers. This platform has become a global powerhouse—used by firms like CommSec in Australia, which represents 74% of retail trading there. Now, all CSE-listed securities will be available globally through Interactive Brokers. This is a huge leap forward in access for CSE issuers and international investors. Thank you to our senior management team for pushing this across the finish line, and thank you to Interactive Brokers. We're very excited about this. We also had some exciting new listings. On Friday, April 11th, SNDL Inc. joined the CSE. They're one of the largest vertically integrated cannabis companies in Canada and the largest private-sector liquor and cannabis retailer in the country. Their retail presence includes major banners like Wine and Beyond, Liquor Depot, Value Buds, and Spiritleaf. Their cannabis brands include Top Leaf, Contraband, Palmetto, Bond, Jack Lab, and No Future, among others. They're also active in strategic investing across the North American cannabis space. BRUCE It gives them access to capital. They've been acquisitive in the past and made lots of strategic moves. ANNA Exactly. The companies that have survived in this space are impressive—strong fundamentals, experienced teams, and aggressive but smart growth strategies. Congratulations to them. We're excited to have them with us. Another new listing is Lithos Group. They're active in clean tech and mining, with patented aqua technology for lithium extraction—sustainable and chemical-free. We haven't talked about lithium in a while, and it's still a well-loved space in the junior markets. Finally, I want to mention Yukon Metals. They closed a $10 million financing and now have over $17 million in the bank to fuel their drill campaigns across the Star River, Arizona, and Birch properties. This was co-led by CoreMark Securities and Canaccord Genuity—big, impactful names. What are your thoughts? BRUCE We're already starting to see money flow into the sector. That's a great example. As returns grow in large-cap stocks, it filters down. People start looking for the next opportunity. ANNA Congratulations to their team—it's a great milestone. As we move into next month, Bruce, what should we be keeping an eye on? BRUCE Unfortunately, it's going to be all about U.S. policy. That'll be the big one. Once we get clarity, we'll start to see leadership shifts—when there's a correction like this, new sector leaders often emerge. ANNA Absolutely. Always a pleasure, Bruce. I have a feeling our agenda may not change much next month—but we'll see. Thank you again. Looking forward to our next chat. BRUCE Thanks. Always great to be here. This is third-party provided content, please see full disclaimer here.
Yahoo
12-04-2025
- Business
- Yahoo
10 days and a $10 trillion market swing: How Trump's tariffs changed the global economy, and what comes next
In U.S. financial history, there are weeks that live in infamy—like the "Black Tuesday" stock market crash of 1929, or the 2008 Lehman Brothers bankruptcy, or the COVID-induced shock of 2020. To this list we can add the "Liberation Day" market meltdown triggered by President Donald Trump's successive announcements of sweeping tariffs over the past two weeks. The ensuing damage was enormous, as panicked investors sold off both stocks and U.S. Treasuries, leading to a $10 trillion wipeout in global equities between April 2 and April 9, when the president "paused" some of his tariffs. While the markets had recovered much of those losses by Friday, most major stock indexes are still in correction territory, and remain in a state of turmoil defined by wild volatility, as many traders fear there's far more economic damage to come. Amid the enduring chaos, a clearer picture is emerging of what happened, and what the potential long-term effects could be. Most obviously, of course, the tariffs themselves have caused the meltdown as, for the first time in nearly a century, the U.S. government has forsaken free markets in favor of mercantilism. On top of this fire, Trump has poured the gasoline of uncertainty, rolling out tariffs in the name of increasing U.S. industrial production, but implementing them in haphazard ways, and then abruptly reversing his decisions. No one knows what he will do next; communication between the White House and business leaders has been scant. The capital markets have made clear that they don't like what's happening. In the most alarming development, many investors have reacted by selling off U.S. Treasury bills—the asset that for decades has represented the safest of safe havens. For the first time in living memory, some players have lost confidence in the U.S. financial system and are seeking security instead in Europe and Asia. This erosion of confidence is being felt not only in the sell-off of T-bills, but in the sudden plunge of the U.S. dollar. Business leaders, who stayed mostly silent until the Liberation Day fallout, are beginning to sound the alarm about long-term harm to the American economy, while companies are scrambling to address upended supply chains and plan for the future. Tariffs, meanwhile, are widely regarded as inflationary, and consumers are increasingly frightened as they realize that the cost of eggs is not coming down, and that cars and many other goods could soon be punishingly expensive, if not out of their reach altogether. In these unprecedented economic conditions, how should executives and investors react? To offer some guidance, Fortune has tapped into the expertise of its veteran business journalists to provide both sharp analysis—such as an overview of the "murder mystery" in the bond market that led Trump to flinch on his latest round of tariffs—and practical advice. We've curated some of our best recent coverage in a special report, . Our guidance includes a look at how some popular assets, including gold and Bitcoin, are performing, and advice on how to adjust your portfolio to account for a declining dollar and other potentially permanent shifts in the financial landscape. We report on how Walmart, Apple, and other Fortune 500 companies are adjusting to a climate in which free cross-border trade can no longer be taken for granted. Together, the stories help explain what happened in the most chaotic 10 days in the market in years, and offer a sense of what could happen next in an economic storm that appears far from over. Read on—and buckle up. This story was originally featured on
Yahoo
26-01-2025
- Business
- Yahoo
The Stock Market Has Breached This Critical Level Only 6 Times in 135 Years -- History Couldn't Be More Clear About What Happens Next
Over the last two years, the market's climb has seemed unstoppable. Every challenge from inflation, rising Treasury yields, and geopolitical tensions has been met with resilient investors buying the dip and taking valuations higher and higher. Part of this has been fueled by the screaming-high valuations of the "Magnificent Seven" stocks, driven by bullish bets on artificial intelligence (AI) and its potential to disrupt nearly every aspect of life. Although many analysts believe the bull rush can continue in 2025, the stock market has now breached a critical level, something that's occurred only six times in history. And history couldn't be more clear about what happens next. Investors frequently draw on historical patterns and data to try to forecast what might happen in the future. One of these data points for the stock market is called the S&P 500's (SNPINDEX: ^GSPC) Shiller price-to-earnings (P/E) ratio, or the CAPE ratio. Yale Professor Robert Shiller popularized the CAPE ratio, which looks at the price of the S&P 500 divided by its average 10-year inflation-adjusted earnings. The ratio uses earnings over a decade to smooth out volatility and irregularities. A higher CAPE ratio tells investors the market may be overvalued, while a lower CAPE ratio may be a signal to investors to buy stocks, similarly to how one might evaluate a single company using the P/E ratio. Here is the S&P 500 CAPE ratio dating all the way back to 1890. As you can see, the average Shiller CAPE ratio is 17.7. But as of this writing, the ratio has risen to the dangerously high level of 37.9. The all-time high CAPE ratio of 44.2 occurred right before the dot-com crash. In fact, the CAPE ratio has only breached 30 six times in 134 years, and those instances were usually followed by a market crash. 1929: The CAPE ratio surpassed 30 in 1929 and was followed by two epic crashes in the stock market known as Black Monday and Black Tuesday on Oct. 28 and 29. The Dow Jones Industrial Average (DJINDICES: ^DJI) fell 25% in those two days and kicked off the Great Depression, a very difficult period for the American economy and stock market. Mid-1997 to 1999: The CAPE ratio hit a staggering level of 44.2 right around the turn of the century and in the lead-up to the dot-com crash. The stock market surged in the back half of the 1990s as investor exuberance raged over the advent of the internet. However, the market clearly got ahead of itself. Late 2017 to late 2018: The market spent the last few months of 2017 and most of 2018 trading with a CAPE ratio above 30. Things fell apart after the first Trump administration began announcing tariffs and started a trade war with China. Early 2020: The CAPE ratio surpassed 30 in early 2020, right before the COVID-19 pandemic essentially shut down the economy for months at a time, leading to a short-lived bear market. Mid-2020 to June 2022: The CAPE ratio traded above 30 for nearly two years, riding a big rally following the worst months of the pandemic due to ultra-low interest rates and various stimulus policies. Eventually, the Federal Reserve realized it was behind the ball on inflation and began hiking rates intensely. Late 2023 to present: The CAPE ratio has now been above 30 since the end of 2023 as the market's two-year bull run has raged thanks to AI, the prospect of lower interest rates, and now Trump's presidency. The CAPE ratio had only risen above 30 three times prior to 2020. Since then, it's been the norm for the market to trade with a high CAPE ratio. Past performance is no crystal ball, and that rings especially true today given how long the CAPE ratio has been elevated. Obviously, the market doesn't just immediately crash when the CAPE ratio surpasses 30. In the past, the ratio has run at elevated levels for years like in the 1990s, in 2020 to 2022, and today. But the environment today has many parallels to the dot-com era in that investors were extremely excited by the growth and opportunities the internet would bring. AI is having a similar effect on the economy, and many investors also cite Trump and his pro-business policies as powerful tailwinds. While no one can know when this historic run will end, it's important for investors to understand this historical context so they are better prepared for the future, even if things may not play out in exactly the same manner. 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The Stock Market Has Breached This Critical Level Only 6 Times in 135 Years -- History Couldn't Be More Clear About What Happens Next was originally published by The Motley Fool Sign in to access your portfolio
