47. The Recipe for a Market Sell-Off: Carry Trade, SAHM Rule, Recession Fear
Market MakeHer Podcast
Intro
Jess Inskip and Jessie DeNuit introduce the episode, guests, and set expectations for the market discussion.
The stock market has been having quite the week since our last episode on the Fed’s decision to NOT do a rate cut and the resulting effects of the not-so-great unemployment numbers that came out last Friday.
Recipe for disaster?
Is the stock market crashing? Why was there a sell-off and what is a market sell-off? And is this a good time for us self-directed investors to invest more, like, is the stock market on sale?
What were the sell-off ingredients?
- The Carry Trade (Yen Got Stronger)
- The Sahm Rule (Recession Indicators)
- Recession FEAR (Emotional Investors)
Sell-Off Decline: Pull-Back, Correction, Bear Market?
We all know that the stock market recently tanked and there was a huge sell-off. Was this a pull back or a correction, are we in a bear market.
The difference is a decline of:
Pull back = 5-9%
Correction = 10 -19% (Stock Market Is Currently Here)
Bear market = >20%
✨The recent turbulence was the most severe since the 34% decline that occurred in Q1 2020.
✨ Market corrections happen almost every year. Since the early 1980s, there's been a greater than 5% drawdown in the S&P 500 Index in every year but two (1995 and 2017).
✨ The stock market has historically recovered quickly from corrections. The average time to recovery from a 5%-10% downturn is three months. The average time to recovery from a 10%-20% correction is eight months.
✨80% of corrections since 1974 have not led to a bear market.
✨ There's a 73% probability of a double rate cute (.50%)
How do we know we are in a recession?
Great Analogy: https://www.tiktok.com/t/ZTNgX6jUW/
Related Episodes:
Ep. 46) Fed Update: What is Event Risk? Could it Trigger a Sell-Off?
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About Us 🌚🌞
Market MakeHer is an investing education podcast taught by a 15-year finance expert to her friend, a beginner investor. Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We teach complex investing topics in a different way - from "Her" perspective.
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Investing involves risk. There is always potential to lose money when investing in securities. Market MakeHer LLC provides educational content and resources for informational purposes only. We are not registered financial advisors & do not provide personalized investment advice. Consult with a licensed financial advisor before making investment decisions.
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