Wall Street and the global financial markets are in crisis. While the oil price flirts with the USD 100 per barrel mark and stock markets are under pressure, nervousness around risky segments such as private credit and technology shares is also growing.
At the same time, striking signals are emerging that some analysts believe could point to excesses in the market, and possibly even an impending economic shock.
Free financial newsletter!
Want to stay informed about the most important developments in the financial world? Then subscribe for free The Money Press.
Join over 6,000 others who every Monday receive a full market update in their inbox. And best of all? It’s completely free.
You can register here!
Super indicator predicts crisis?
One of those signals is what investors call the “super indicator”: striking signs of euphoria and self-confidence at the height of an economic cycle.
Historically, there have been more symbolic moments that subsequently coincided with major financial crises. For example, the iconic Chrysler Building in New York was completed just before the stock market crash of 1929, while the Petronas Towers in Malaysia were completed around the outbreak of the Asian crisis in the 1990s. The opening of the Burj Khalifa in Dubai also coincided virtually with the global financial crisis of 2008.
According to behavioral scientists, advertising behavior can also be an indication of speculative exaggeration. During the dot-com bubble around 2000, dot-com companies dominated the commercials surrounding the Super Bowl, an event traditionally seen as a barometer of commercial ambition and market sentiment.
The so-called “Crypto Bowl” followed in 2022, in which crypto companies advertised en masse at the peak of the market. This year the same pattern seems visible, but around artificial intelligence. During the last Super Bowl, an estimated 15 ads were dedicated to AI products and services.
Crash not inevitable
That does not automatically mean that a crash is inevitable. Popularity and technological advancements can also be legitimate reasons for strong marketing campaigns and rising valuations.
Yet there is growing belief that parts of the stock market are showing signs of overheating, especially as companies benefit from the huge hype surrounding AI applications.
The timing of these signals is striking, because they coincide with other tensions in the financial system. Rising energy prices, uncertainty surrounding private credit funds and rising interest rates are putting pressure on global liquidity.
If investors start to avoid risk en masse, it could lead to sharp corrections in sectors that benefited most from optimism about the future, such as technology and AI.
This is also relevant for Bitcoin. Historically, Bitcoin and other digital assets have moved strongly with global risk appetite. If the AI hype turns into disappointment and confidence in economic growth declines, this could cause a chain reaction that also affects the crypto sector.
Free financial newsletter!
Want to stay informed about the most important developments in the financial world? Then subscribe for free The Money Press.
Join over 6,000 others who every Monday receive a full market update in their inbox. And best of all? It’s completely free.
You can register here!
Source: https://newsbit.nl/is-dit-de-super-indicator-die-een-ai-crash-en-mondiale-crisis-voorspelt/
