America's long shutdown and data blindness
The United States has been in a partial shutdown for the past 43 days. Only essential departments were operating, while all other government units were closed. About 700,000 government employees had to stay home without pay, and many important economic departments were also shut down. This directly affected the release of macroeconomic data such as inflation numbers, employment reports, and industrial output, which were not released for 43 days. When no data comes in for such a long time, the market goes into a kind of blind state where everything starts to rely on guesswork.
Market guesswork and uncertainty
Due to the lack of data, the market has assumed that inflation may have risen significantly and the employment data could also be poor. Based on this assumption, a new concern has arisen that the expected rate cut in December may no longer happen. Some time ago, 70 to 90 percent of the market was confident that a 0.25 percent rate cut would occur in December, but now uncertainty has increased. Uncertainty is always the biggest risk for the market, and that is what has been observed here.
The sharp decline of AI stocks and sentiment shift
As sentiment weakened, the first impact was seen on technology and AI-focused companies. The valuations of these companies were already quite stretched, so the correction came fastest here. Tesla dropped nearly 6 percent among the Magnificent Seven, Nvidia about 4 percent, and noticeable declines were also seen in Google and Amazon. This correction indicates that the market is viewing AI valuations as somewhat risky in the short term.
Why did the crypto market fall?
The crypto market and the stock market are largely correlated today. As soon as there was a sharp correction in US equities, crypto also slipped along. Short-term panic was evident in Bitcoin, altcoins, and the entire crypto ecosystem. This decline is not due to any fundamental weakness but is a correction triggered by macro uncertainty.
What’s next? Is this just a temporary phase?
When the updated inflation and employment numbers from the US are released, the picture will become much clearer. Looking at the available indicators, it does not seem that inflation will have risen as much as the market is assuming. Employment numbers are also likely to remain stabilized. Therefore, there is no need to panic. This correction has occurred due to a macro blind spot, and as fresh data comes in, sentiment could largely normalize.
Conclusion
This phase of the market appears temporary, and as real data emerges, clarity will replace speculation. In such times, avoiding panic selling is wise. What do you think? Is this correction healthy, or will we see more volatility in the coming weeks?
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