Yesterday’s decline was not primarily due to the recession, the liquidation of Ncaritrade.
- a recession
It’s often called the “Sahm Rule,” and if the index is higher than 0.5, there will be a recession. That’s right. It has been that way. But it’s different now, and it’s easy to think about when the Yield Curve turned around. Did the recession come then? “I don’t think that’s right when you look at the current economy,” two people who created Yield Curve and the Sahm Rule said in Bloomberg. - Anne Carrie Trade
When an American institution borrows yen from Japan and invests in foreign goods, its biggest buyer is U.S. government bonds. When Japan’s interest rates go up, selling foreign goods and paying back loans is called the “Ncaritrade Liquidation.” So, if the main reason for this decline was the Ncaritrade Liquidation, U.S. government bond rates would go up like crazy. Did U.S. government bond rates go up like crazy? If you say, “I would have slowed it down so you can’t tell,” if this decline is slow… If it accelerates, it’s going to be Nasdaq -15%. 😅 - So what’s the cause?
Personally, I think the CTA algorithm mistake was the cause of the drop. Now, institutions all over the world don’t buy or sell with buttons. Everyone has AI algorithms on their hands. This drop is due to the error of misusing the CTA algorithm. “Oh, that’s the only thing that made this big drop?”
Yes. I think it’s very likely. But I wouldn’t say it’s a mistake, would I? Instead, I wouldn’t give individual investors a “chance” to buy cheaply. That’s why we roll back the volume we bought at a low price and block the market. Simple computer error? Overload because there’s a lot to deal with? I don’t know..
It’s good to see the indicators. It’s also good to watch the news. But I need to think, “Will it be right this time, too?” Nowadays, the economy often doesn’t fit even if we bring the old indicators or rules. Maybe the era of the new normal has already come and we need to rewrite the economics textbook. Many people write this for your reference. 😎