#MarketTrends
Debt Crisis: America’s $35 Trillion Time Bomb
The U.S. national debt has surged to $35 trillion by mid-2024, equating to a debt-to-GDP ratio of 98%.
Neither political party shows urgency to address this issue, which risks escalating interest costs and economic instability.
The debt could surpass 140% of GDP by 2032, straining fiscal sustainability.
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The Insight: How To Find The Opportunities
Consider companies benefiting from government spending cuts or infrastructure investment.
Diversify into commodities or foreign markets to hedge against potential dollar weakening and liquidity crises.
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#QuoteOfTheWeek
"A market downturn doesn't bother us. It is an opportunity to increase our ownership of great companies with great management at good prices." - Warren Buffett
Warren Buffett views market downturns and recessions as buying opportunities rather than reasons to panic sell.
He focuses on acquiring quality companies at discounted prices during these periods.
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#News
Global Markets in Turmoil: How U.S. Volatility is Spreading
Recent financial markets have been marked by high volatility, significant fluctuations, and a notable sell-off in U.S. markets.
Earlier this year, markets performed exceptionally well, with the Nasdaq gaining over 30% due to strong technology and AI-related forecasts.
Despite the recent correction, the Nasdaq still shows around 20% returns for the past year, exceeding its long-term average.
This volatility has affected global markets, including Australia and Asia, with Japan experiencing a single-day loss of over 10%.
Concerns about the real economic strength of the U.S. economy have fueled pessimism, despite capital markets being influenced by changing expectations in a generally stable environment.
4.3% Unemployment: What It Means for the U.S. Economy
The latest U.S. job data revealed an unemployment rate climbing to 4.3%, higher than expected.
This increase in unemployment has sparked fears of an economic slowdown, fueling speculation about a potential 50 basis point rate cut by the Federal Reserve.
Reflecting these concerns, yields on 2-year U.S. government bonds have dropped sharply, indicating market expectations that the Fed might intervene to cushion the economy and ensure a soft landing while keeping inflation in check.
Australia vs. U.S.: The Tale of Two Job Markets
In contrast, Australia's economic situation appears more stable.
The jobless rate here mirrors the U.S. on the surface but has shown remarkable resilience, primarily supported by steady immigration numbers.
Currently, there is little expectation of a rate cut from the Reserve Bank of Australia (RBA), highlighting a divergence in monetary policy responses between the two nations.
Supplier Revolt: Why Temu Faces Unprecedented Backlash
Temu faces backlash from suppliers.
PDD’s Temu is facing protests from suppliers over fines, withdrawal limitations, and other measures being taken by the platform.
Temu’s suppliers have always dealt with narrow margins for higher volumes, but those margins are now being squeezed even more.
Temu is a two-sided marketplace that aggregates buyers and sellers like Uber and Airbnb.
The playbook for platforms like this is familiar: first, attract sellers with attractive terms, then attract buyers, and ultimately leverage the buyers to change terms for sellers.
The system must be sustainable for sellers, or it will collapse. Let's see how this unfolds.
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Best Regards,
James Lim, SFA Founder
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Top 3 discussed stocks : $NVIDIA Corp(NVDA)$ $Tesla Motors(TSLA)$ $Trump Media & Technology(DJT)$
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