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Wealth destruction

Sep 28, 2022

57.8 trillion USD: this is the amount of market cap of US equities and fixed income lost this year. The amount dwarfs the market value lost during the Great Financial Crisis. We have 2 thoughts when looking at this chart: 1/ the enormous amount of wealth destruction ( at least on paper ) impacting pension funds, endowments and private households. And 2/ the disorderly unwinding of years of accommodative monetary policy. After having been late in tightening, the Fed may well be about to overdo things in the other direction with nasty consequences for the economy and the savers. The strong USD does not help either and sends the same signal. Several prominent strategists already believe the Fed could pivot again soon. Stay defensive as volatility will remain high with the earnings season kicking in.

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