Ben Norton is joined by economist Michael Hudson to discuss the extreme volatility, AI / Big Tech bubble, Japanese yen carry trade unwind, Chinese economy, and geopolitical dangers.
This was the biggest market plunge since the beginning of the pandemic in 2020, when many investors were selling off their holdings, fearing that there was going to be a big recession.
In fact, as of the August 5th crisis, the volatility index, the VIX, which is a measurement of how rapidly stock prices move in the S&P 500—which is the stock market index of the 500 biggest companies on U.S. stock exchanges—the volatility index is at the highest level since the beginning of the Covid-19 pandemic. That’s a very dangerous sign.
In fact, as of the August 5th crisis, the volatility index, the VIX, which is a measurement of how rapidly stock prices move in the S&P 500—which is the stock market index of the 500 biggest companies on U.S. stock exchanges—the volatility index is at the highest level since the beginning of the Covid-19 pandemic. That’s a very dangerous sign.
A lot of the wealth in the U.S. equity market is concentrated in a small handful of Big Tech corporations, which are collectively known as the “Magnificent Seven”, or MAG7.
On the day on Black Monday on August 5, they lost $600 billion in stock value. And these MAG7 companies are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. In 2023, these MAG7 companies accounted for half of the S&P 500’s total gains in the entire year. And in one day, they fell around 3%. That, again, is around $600 billion.