Market Update – 10/8/2021

Categories: Financial News, Family OfficePublished On: October 12th, 2021Comments Off on Market Update – 10/8/202113.1 min read

The debt ceiling reached a short-term agreement and default risk was postponed to early December. Due to the positive news, US stocks stopped falling and rebounded this past week. Future economic performance may not be as optimistic as the market estimates.

The increase in electricity and energy prices will affect production and reduce disposable income. It currently has a greater impact on Europe and China, and can potentially further promote global price increases.

China is currently the only country in the world that has a zero-tolerance policy to control COVID-19. In addition to power shortages, China’s dependence on real estate industry is facing changes. Once its economy slows down, there will be a significant impact on the world.

The United States may be able to avoid an economic recession, but the impact on the financial market is unavoidable. In the Asian Financial Crisis, the global economy fell into recession while the US economy remained unaffected; however, the S&P 500 still fell by 20% in 1997. In the worst-case scenario, the lack of confidence in financial markets can lead into economic recession.

Current issues such as the ongoing epidemic, debt ceiling, and the passage of the Infrastructure Investment and Jobs Act are all uncertainties. In addition to the use of investment portfolios to diversify risks, investors are also encouraged to consider safer fixed-income products, such as private lending with real estate collateral, while interest rates are low.