A Real (Estate) Reason for the Markets to Go Down
One lesser observed factor in the valuation of markets is the effect of economic change in the city of New York.
When economic news directly affecting arguably the largest community of traders and financial managers in the world is reported, then that group is more likely to react as they realize the economic realities of the rest of the country and the world.
An article on the Confounded Interest website reports what will likely have an impact on the direction of the markets in the coming days.
"With interest rates still rising, prices retreating and credit evaporating—and a stressed-out banking system moving to shore up balance sheets—expect more fire sales..." of mortgage backed loans (debt) "...and an acceleration of plunging CRE [commercial real estate] values in markets across the US."
[Paragraph 5 of the article addresses NYC commercial real estate values.]
The closing values of the major index on Tuesday, April 4, 2023 were: DOW - 33,402 | S&P500 - 4,101 | Nasdaq100 - 13,100
We'll be watching to see where these numbers go as real estate markets are revalued as a result of bank failures.
Our primary observation here is that the markets go up and down mostly on speculation and that this revaluation of assets in the markets is a "a dose of reality" that won't be able to be ignored.
EWAQ (Ending With A Question)
Does this dynamic in any way affect the argument that government should not be involved in the markets - manipulating interest rates and effective money supply?
And another question for the purpose of future understanding: How would this situation be different if governments (federal/state/local) were able to be completely isolated (some would argue this is an impossibility) from markets?
[ 04/11/2023 10:00 ] Market values: DOW - 33,632 | S&P500 - 4,108 | Nasdaq100 - 12,992