The expected slap has arrived. Worse than DeepSeek, worse than the initial implementation of tariffs, the fact that Trump did NOT say the word “RECESSION,” but ABOVE ALL, that he did not deny the POSSIBILITY of a RECESSION, has crushed all the beautiful theories of infinite growth, the money-printing machine that is artificial intelligence, the idea that ROBOTAXIS will push Tesla to $1,500, and that tech—at these levels—is still cheap! Not to mention the belief that “The Fed is our friend, and they will (soon) cut rates!!!”
The market just had its worst day in three years, and I’m not EVEN on the plane yet!!!
The Magnificent Seven… Not So Magnificent Anymore
We’re not in full-on CRASH mode just yet—and probably won’t be anytime soon—since fear levels are through the roof, volatility is flirting with 30%, and that’s usually the level where people start “buying the dip.” But let’s just say yesterday’s MASSIVE SLAP in the face served as a reminder that YES, the market can still go down.
After nearly 18 months of defying sellers, with buyers confidently scooping up every 5% dip—because, come on, it’s cheap!—the Nasdaq just plunged violently into correction territory. And given yesterday’s carnage, financial media is already throwing around the term BEAR MARKET. Just as a reminder: a correction means a 10% drop from the highs, while a bear market starts at a 20% decline.
Right now, the Nasdaq 100 is down 12.6% from its peak, the Composite has lost 13.5%, and the SOX (semiconductor index) has crashed 25% since its July highs. But the real problem in this tech bloodbath is that the Magnificent Seven got absolutely wrecked. And since these seven giants make up such a massive chunk of the market, we’re getting a practical lesson in just how dangerous over-concentration can be.
This isn’t exactly news, but now we’re REALLY feeling it. Nvidia is down 28% since early January—and that’s despite delivering stellar earnings in February. Imagine what would’ve happened if they had issued a profit warning. Microsoft also reported fantastic numbers, but it’s still down 18% from the highs. Meta is down 19%, Apple 12%, Amazon 20%, and Google 19%. As for Tesla? It’s a full-on bloodbath. The company, which was supposed to flood the world with self-driving robo-taxis, has collapsed 53% since December. Just yesterday, Tesla tanked another 15% after UBS slashed its sales expectations by 20%, as nobody wants a Tesla anymore. In fact, “I Bought a Tesla Before Elon Went Crazy” bumper stickers are selling like hotcakes—so owners can justify their purchase.
Recession Fears
Long story short, tech got obliterated yesterday. The Magnificent Seven alone lost over $750 billion in market cap—that’s a hell of a lot of yachts and Bugattis up in smoke overnight. And the rest of the market crumbled right alongside them. Banks got hammered—because, of course, they’d be the first to suffer in a recession. Delta Airlines basically issued a profit warning, saying consumer confidence is eroding. Novo Nordisk’s new obesity drug, CagriSema, disappointed investors because it only leads to a 15.7% weight loss over 68 weeks—instead of the expected 20%. That’s right, their stock plunged 10% because someone weighing 120 kg would “only” lose 18.84 kg in 16 months instead of 24 kg. If you needed proof that this market is insane, this might be it.
Since the start of the year, between crypto and U.S. equities, $5.5 trillion in market cap has been wiped out. And all because of two things:
- Tariff uncertainty—nobody knows what Biden is actually trying to achieve, or when he’ll stop flip-flopping on trade policy.
- Sudden “recession fears.”
Yesterday’s market meltdown was largely triggered by Trump’s latest interview. He refused to say we’re heading into a recession… but also refused to say we aren’t. And since markets hate uncertainty, everything spiraled.
But let’s be real—there wasn’t some earth-shattering new development that tanked the market. It’s more like investors are exhausted. Everyone’s sick of this back-and-forth on tariffs, with policies that change every other day. One moment, tariffs are on, then they’re off, then they’re back on again. It’s like some weird trade-policy hokey pokey, and markets have had enough.
What Now? More Pain or a Rebound?
After getting absolutely crushed, markets are now drenched in red. Tech is in shambles, the Nasdaq has dropped 12% in just 13 trading days, put volumes are hitting all-time highs, and volatility is off the charts. So, are we setting up for a massive short squeeze?
Interestingly, since yesterday’s close, Nasdaq futures have bounced nearly 350 points into positive territory. Without jumping to conclusions, it seems like yesterday’s sell-off was more about frustration than fundamentals. The tariff mess is exhausting, and Trump’s vague comments were just an excuse to panic.
The rest of the week will give us more clarity, but I have a feeling my vacation will mostly involve watching my screen—just in case there’s another wild story to tell.
Germany, the Economic Support Fund, and the Greens
While the Americans were turning into bears and simulating total panic, Europe also had its own problems to deal with. And one of Europe’s problems was Germany’s economic support fund. You know, that famous fund that was announced with great fanfare last week. Well, since yesterday, doubts have been growing about whether it can actually be implemented, as the new German government needs a two-thirds majority in parliament to approve the signing of the €500 billion check. And since yesterday, the Greens have dug in their heels, arguing that the project is poorly put together. Without the Greens, the right-wing’s grand plan could remain stuck in the pipeline.
Needless to say, if the promised €500 billion meant to “make Germany great again” isn’t put on the table as planned, it could be a painful blow for some investors who were counting on it to justify the valuations of certain German stocks!
Yesterday, Germany fell “only” 1.69%, and we’re eager to follow the next episode of the drama unfolding in the Bundestag. But I must say, it would become truly laughable if a right-wing government, elected by the people to revive the economy, were unable to implement its reforms because of a group of Greens who can no longer even buy a Tesla—because Elon Musk is an idiot—and who, on top of that, are questioning the planned military spending meant to save the world from the Russian threat. Yes, because in the process, the Greens are also proposing to tighten the screws on defense spending.
In summary, if the right wants to push through its recovery plan, the German army may have to go fight the Russians on bicycles, throwing tomatoes and rotten vegetables at them—because we can’t afford to spend too much… Frankly, I think yesterday’s market movement was a technical aberration and that there is still hope. But on the other hand, I do wonder what some governments are smoking, because every time, it borders on the ridiculous. And apparently, it’s not just in France.
The Rest
This morning, the Nikkei is down 1.5%, Hong Kong is falling by 0.9%, and China is holding up relatively well, despite all the talk of “deflation” and the usual doom-mongering. The Chinese market is currently down 0.5%. Japan’s Q4 2024 GDP growth has been revised downward, from 2.8% to 2.2%, with slowing consumer spending as the culprit. But despite this, the Bank of Japan is still expected to raise interest rates due to the economy’s resilience and persistent inflation.
Oil is also getting crushed, as last night’s RECESSION FEARS triggered the usual reflex: if a RECESSION is coming, people will stop putting gas in their cars, vote Green, and start commuting on scooters. As a result, crude oil is now at $65.93 per barrel, and gold is at $2,901. Even gold can’t seem to rise anymore.
As for Bitcoin and cryptos, I won’t even draw you a picture—Bitcoin broke recent lows, establishing a new bottom at $76,600. For now, BTC is rebounding and trading at just over $80,000. One thing is certain: even though the markets got thrown out the window yesterday, I don’t get the sense that we’re starting today in a state of fear—quite the opposite. At this very moment, I’m this close to buying Tesla calls!
Thoughts for the Day
As for today’s news, there’s virtually nothing noteworthy—everyone is still analyzing what happened yesterday. Today will be about figuring out whether we just witnessed a minor hiccup and everything will get back on track in the coming days, or if this is truly the start of something bigger.
Let’s not forget that last week, the Atlanta Fed’s GDP NOW data was already signaling that a recession was looming. The question now is: what do we do about it? Because here’s a thought—if the U.S. economy enters a recession due to Donald Trump’s construction projects, and inflation collapses as predicted by Truflation data, the Fed could very well ride in on a white horse at the end of the quarter to cut interest rates and bring back the good old central bank put. Then, all we’d need is for Trump’s plan to kick into full gear over the next nine months, and boom—we’d have our next bull market…
Yes, I admit my theory is a bit far-fetched, but hey, I have ten days of vacation to refine my strategy.
On the economic front today, we’re eagerly awaiting the JOLTS report to see if our theory about slowing employment, rising unemployment, and an upcoming RECESSION holds water. Then, all that’s left is to wait for tomorrow’s CPI report… but I won’t be here for that!
So, all that’s left is for me to wish you an excellent day (still), and I’ll see you again on the morning of March 24 for new adventures. Who knows, by then, the S&P 500 might be back above 6,000, since in the past three years, it has never stayed below its 200-day moving average for long. Let’s hope it lasts!
Have a great week—see you in 13 days!
