My Thoughts on the Yen and What to Expect Next

This past week has seen lots of action in the markets, and much more is to come.  Tech stocks continued their sharp decline, with Nvidia crashing all the way below 103 yesterday, having lost more than 27% of its value in less than six weeks.  Other stocks such as Advanced Micro Devices (AMD) have tumbled even further, as AMD has now lost over 40% of its value since March.  Meta has dropped by more than 18% in July alone, while Tesla has lost more than  20% of its value this month. 

It is time for a bounce, as tech stocks in general have become quite oversold in the short term.  The Nasdaq has dropped more than 10% from its peak, but it looks ready for a nice recovery.  Whether these bounces will be mere technical bounces in an emerging downtrend or the start of a final march to new highs is difficult to say.  The Fed will almost certainly be cutting rates in September, and market participants will want to seize on this as yet another excuse to buy stocks with abandon. 

As noted in my writeups, the equity market exploded higher in late 2023 when the Fed promised to start cutting rates in 2024.  The rally continued even as the Fed was forced to hold off due to its rosy inflation forecasts being extremely premature.  With stocks now near all-time highs, I suppose the fact that the Fed is finally going to lower interest rates is as good an excuse as any for people to yet again buy stocks.  One might wonder how many times people will continue to act on the same news, but we should never ascribe rationality to investment decisions by the public.