Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Expert who called the 2008 crisis says repeat of December meltdown is inevitable

A repeat of that rout that wiped nearly 20% off the S&P 500 last December may be unavoidable, warns our call of the day from former GLG global macro...

Edge of your seat or under your seat may both be good spots to watch the U.S.-China trade talk-show getting under way Thursday.

That’s judging by the stream of conflicting news reports that have been whipping markets around, such as one report saying the Chinese would bail early, briefly wiping 300 points off Dow futures late Wednesday. Wall Street shares are up in early trade on some promising trade headlines, but it’s early still.

And then earnings season kicks off next week with some big banks. Before you know it, we’re hitting the holidays and maybe some uneasy flashbacks to last year’s December stock meltdown.

A repeat of that rout may be unavoidable, warns our call of the day from former Goldman Sachs alumnus Raoul Pal. “We’re coming into a period of illiquidity for equities,” the author of the Global Macro Investor newsletter, followed by the world’s biggest hedge funds, told MarketWatch in a recent interview.

He cites three reasons why a repeat of that stock selloff may be inevitable. The first is the blackout period for companies, which hits around earnings time when their share buy backs start to slow. Secondly, he notes that this year has also seen problems with the short-term borrowing market, or repo market, that the Federal Reserve has been trying to tackle. It could mean less buying from market makers — who help create liquidity for markets by bringing buyers and sellers together.

Pal says the third biggest issue facing stocks involves the baby boomers, Americans born between the mid 1940s and mid 1960s. They face an annual requirement to sell about 5% of their individual retirement accounts, loaded with stocks in some cases, as they reach 70.5 years old.


“The problem is the gap between this year and last year is huge. It’s like 50% increase in the amount of selling that has to be done,” said Pal, who was among the few investors who predicted and profited amid the 2008-09 mortgage meltdown. “They have to start selling by year-end. If you take out the Christmas week and you’re a financial adviser, and you want to get this done early, you will start in October.”

He blames boomer selling for part of the meltdown for stocks late last year. “The marginal change of an American baby boomer thinking ‘I’ve got too much equities,’ which they do have — that is catastrophic for the system, because they have way, way too much risk,” says Pal, co-founder of Real Vision financial television.


The market


The Dow DJIA, +0.83% , S&P SPX, +0.89% and the Nasdaq COMP, +0.89% is up, having been bounced around on conflicting reports of trade progress. Oil US:CLV19 is up, gold GCZ19, -0.89% is down, and the dollar DXY, -0.34% is falling.

Europe stocks SXXP, +0.72% are up. Asia markets ADOW, +0.06% rebounded to mostly finish higher.


The chart


Our chart of the day shows investors headed for the sidelines in a big way ahead of U.S.-China trade talks. Vanguard’s S&P 500 exchange-traded fund VOO, +0.86% shows an outflow of $2.9 billion at the start of this week, marking the biggest withdrawal in the past 10 months, notes Naeem Aslam, chief market analyst at ThinkMarkets:

He adds that that’s the second-biggest withdrawal on record since the fund’s inception in September 2010:

The Vanguard fund is the third most popular such fund behind the SPDR S&P 500 ETF Trust SPY, +0.90% and the iShares Core S&P 500 ETF IVV, +0.90%.

Read: Securities and Exchange Commission rejects another bitcoin ETF proposal


The buzz


Apple AAPL, +1.37% pulled an app that allowed Hong Kong protesters to track police, a day after being harshly criticized by a China state newspaper.

Opinion: Professional investors are selling stocks as international risks pile up

Oxfam report finds workers overworked and poorly treated at a sweet potato farm that supplies Amazon’s AMZN, +0.64% Whole Foods, which says that’s not an accurate reflection.

Senate Majority Leader Mitch McConnell, a longtime opponent of reforming marijuana laws, expected to spend two days meeting with industry executives, sources tell MarketWatch.

Blackouts, traffic jams and a rush to buy flashlights across Northern California as Pacific Gas & Power PCG, -29.42% cuts power for a million people.

Data with the latest on jobless claims and consumer prices mostly met expectations.


Random reads


Rugby World Cup cancels two matches as Japan braces for Super Typhoon Hagibis

You feel what you eat. Researchers find a link between depression and diet

And stay married, live longer, at least in the U.S., says survey

$300 haircut for Rep. Alexandria Ocasio-Cortez raises eyebrows

London airport braces for chaos from climate activists Extinction Rebellion

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×