US leading index S&P 500: rally after inflation data - financial expert warns of possible speculative bubble

US leading index S&P 500: rally after inflation data - financial expert warns of possible speculative bubble

According to a report by finanzmarktwelt.de, the US benchmark S&P 500 index rallied yesterday after selling off on Tuesday following US inflation data. This is being interpreted as a technical response to the short-term oversoldness of US stock markets on Tuesday, as well as comments from US Treasury Secretary Yellen, who urged not to overstate a single inflation number. Yellen is trying to gloss over the dilemma of inflation as it prevents interest rate cuts that are needed to deal with the massive US debt.

A chart circulating on Wall Street shows a 94% agreement with the price trend before the crash of 1929. This suggests a speculative bubble that is driven primarily by the euphoria in the field of artificial intelligence. Despite interest rates remaining high, there appears to be too much liquidity in play, which the Fed cannot further fuel by cutting interest rates.

Furthermore, Pfandbriefbank and Aareal Bank were downgraded by rating agencies, while investor Michael Burry increased his bets on two tumbling China stocks.

These developments could possibly indicate that a correction or even a crash is imminent on the stock markets. As a financial expert, it is very important to closely monitor these developments and assess possible risks. It is advisable to act cautiously and hedge your own portfolio accordingly to limit possible losses.