[‘23 Trend #2] Inside the Financial Contagion

Sporadic selling leads to more selling, then pandemonium [The Wiggin Sessions]( [HOT TOPIC 2023:]( “[Central Banks are crushing the Real Economy]( proclaims Nomi Prins, PhD in economics with an emphasis on central banks. She was the former managing director at Goldman Sachs. Nomi’s concern right now is that we’re entering a crisis similar to the one which wiped out her mother’s retirement savings in the early 2000s. Good news if you’re an American going to the pub in London today, though. That £2 pound pint used to set you back as much as $7 when sterling was approaching $2.50. Today, that two pound pint… is, well, $6.44. The pound tumbled to the lowest level since 1985, sliding 3.5% in the third-largest drop in 20 years. The move was partially in reaction to a new stimulus plan introduced by the UK government. The “growth” plan includes tax breaks and other stimulus similar to those Trump put into place during his presidency in the U.S. Americans! Drink up to the new PM, Liz Truss! The selloff in the pound is a symptom of what’s known as “cross-asset” trading the world-over. Money managers in big banks and hedge funds were selling riskier assets and buying up the American dollar. As a result, “the dollar soared to a two-decade high,” writes Lu Wang in Bloomberg, “tightening financial conditions for a slew of borrowers in the developed and emerging world, while causing Japan to intervene to support the yen for the first time since 1998.” “Freakish gyrations put stress on risk models used by big money,” the Bloomberg piece sums up. It’s official… Intel, the semiconductor giant, is down 45% on the year – the Dow’s biggest loser. Tech stocks as a bloc are down over 30%. Each of the major indices – the Dow, S&P and Nasdaq – are all down 20%-ish… i.e. bear market territory. “The financial markets are trading based on what they see the Fed doing,” we observed in [this week’s Session with Nomi Prins]( “but the impact on the ‘Real Economy’ is even more direct. It’s impacting real people trying to finance their own lives.” While there’s no sign of panic in our everyday lives yet, the danger is that what Nomi calls “[financial contagion]( will set in. My conversation with Nomi Prins is a good one. It avoids sensationalization while still maintaining a distinct sense of urgency. We’ve written our way through two financial crises – the Tech Wreck and the Panic of 2008. [This one feels like it’s shaping up to be a whole different animal…]( Enjoy, [Addison Wiggin] Addison Wiggin Founder, The Wiggin Sessions P.S. Markets move in cycles. Sometimes they get out of hand. From my experience, no one wants to hear it until the crisis has already begun. Then “psychosis” hits. Sporadic selling begets uncertainty. Then widespread “cross-asset” selling and [pandemonium](. Sponsored by Magnifi [Imagine having all the market data and intelligence you need, at your fingertips]( [Click here to learn more]( Introducing Magnifi Personal, with the world’s first AI-powered investing assistant. Cut through the noise, with data-backed analysis and chat-based guidance for over 15,000 investments that you can trade right in the app. [Click here for 2-months free — only for Wiggin Session listeners!]( Ed note: Got something to say? Send your feedback to The Wiggin Sessions [here.](mailto:WigginSessions@5minforecast.com) LISTEN ON [The Wiggin Sessions]( The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Consilience, LLC. delivering daily email issues and advertisements. To end your The Wiggin Sessions e-mail subscription and associated external offers sent from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at support@5minforecast.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2023 Consilience, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.