By Pictet AM
The stock market correction on the Nasdaq Composite has surpassed in magnitude that of July-October 2023. However, it is half the size of 2018. Historically, a market recovery, particularly for technology stocks, will depend on the attitude of the US Federal Reserve. For the moment, it’s silent. That’s not necessarily a cause for concern. Such a correction is not exceptional. Above all, it can be explained in part by a misreading of US figures. True, the unemployment rate rose in July more than expected. But this statistic is skewed by the effect on Texas figures of Hurricane Beryl in early July. This led to temporary layoffs. Between the end of June, when markets were still buoyant, and today, the macroeconomic scenario remains the same. The soft landing scenario dominates.
In the best-case scenario, strong results from Nvidia on August 28, coupled with a resumption of share buybacks, could lead to a rapid rebound in shares.
But let’s be aware that, in the past, a correction phase like the one we’ve had leaves its scars for several months – on average between three and four months.
As a result, we’re going to have to sit tight for perhaps longer than expected – potentially until October, or even early November due to the US presidential election on November 05.
Any other topic.
As you know, during the summer months, many things go – unfortunately – unnoticed.
Such is the case with a study published less than ten days ago on universal income. This idea is often promoted in France.
The idea is to give a fixed sum to all citizens, with no conditions or quid pro quo.
Well, it doesn’t work.
The first full-scale experiment was conducted over three years in Texas and Illinois, involving 1,100 households with an annual income of less than $29,900.
During this period, they received $1,000 a month in universal income.
This was financed by the founders of ChatGPT.
Results :
- Unemployed participants stayed unemployed for an average of one month longer than unemployed members of the control group not benefiting from universal income.
- Participants worked less and there was no substantial change in job quality. With this extra income, they did nothing to improve their education or training for a better life and greater financial comfort.
In short, it’s a nice idea with good intentions. But it’s a failure!
