Beginning of the end? US equities sell-off wave affecting global economy - Jim Rogers
“America is [the] largest debtor nation in the history of the world and the largest economy in the world. So, what it does, affects other large economies like Japan or Europe. If America has a problem, everyone has a problem,” Rogers said.
Crises usually start in smaller places, and this has already begun. Argentina, Turkey, Venezuela, Indonesia have already been collapsing, and it could be the beginning of the end, Rogers said.
The Dow Jones index on Thursday fell 546 points, or 2.1 percent, to 25,053, the S&P 500 slid 2 percent, and the Nasdaq dropped 1.25 percent. Dow’s two-day losses account for nearly 1,400 points, Nasdaq is into correction territory, dropping 10 percent from all-time highs. The S&P 500 index closed lower for a sixth straight day.
One of the reasons for the meltdown in US equities is uncertainty about hiking the US Federal Reserve rates. To President Donald Trump’s chagrin, the Fed raised rates on September 26 for the third time this year and the seventh time since Trump was elected, and is hinting at further rate hikes.
Trump has said the Fed “has gone crazy,” and that the Fed was ‘going loco’ about rising rates. Rogers says that Trump is wrong about his attitude to the Fed’s policy.
“The truth is the Federal Reserve did go crazy a few years ago and drove interests rate down to zero which had never happened in history. Now, they are trying to get sanity back and raise them to the proper level,” Rogers noted.
The Fed was set up to be independent from politicians and their pressure, he added. The analyst also noted that Trump’s foreign policy is making China, Russia, Iran and Turkey closer and that “it may hit America in the long run”.
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