This article was originally published by Michael Snyder at The Economic Collapse Blog.
We have never seen so much stock market wealth get wiped out in such a short period of time. Unfortunately, many major players on Wall Street who made a ton of money on the way up were not prepared for a rapid reversal of this magnitude.
In an article that I posted on Friday, I wrote that “a lot of financial institutions that are deeply overextended” could quickly “find themselves in a tremendous amount of trouble”, and that is definitely turning out to be quite accurate. All of a sudden, hedge funds are being hit with absolutely enormous margin calls, and this threatens to create a “doom loop,” which could potentially push stock prices a whole lot lower.
The panic that we are witnessing on Wall Street right now is very real.
Since January 17th, more than 11 trillion dollars in stock market wealth has been wiped out.
In fact, a total of 6.6 trillion dollars in stock market wealth was wiped out on just Thursday and Friday…
Roughly $11.1 trillion has been wiped away from the U.S. stock market since Jan. 17, the Friday before President Donald Trump took the oath of office and began his second term, according to data from Dow Jones Market Data.
Some $6.6 trillion of that figure was lost on Thursday and Friday alone — the largest two-day wipeout of shareholder value on record, Dow Jones data showed.
We have seen larger percentage drops over the course of two days, but in dollar terms we have never seen stock prices drop as much as they did during that two day period…
Markets have seen bigger percentage drops, such as in 1929 when they tumbled 25 percent over October 28 and 29 that year, but never as much in dollar terms.
This was truly historic.
And now a lot of people are concerned that we could potentially see a “Black Monday” and a “Black Tuesday”…
The selloff that followed President Donald Trump’s “Liberation Day” tariff announcement was large by any measure, a Black Thursday and a Black Friday. If they are followed by a Black Monday and Tuesday, then everyone is in trouble.
Hopefully global financial markets will start to stabilize soon.
But it certainly hasn’t happened yet.
During an interview with CNN, Agriculture Secretary Brooke Rollins openly admitted that the White House knew that there would be “uncertainty”…
“The idea that we didn’t know that there would be some uncertainty just isn’t true,” Secretary of Agriculture Brooke Rollins said on CNN’s “State of the Union.” “We knew there would uncertainty.”
But Rollins urged Americans not to look at Thursday and Friday’s trading and say, “the world is ending; the markets are crashing.” Instead, she argued, “the markets are adjusting.”
I wouldn’t call this an “adjustment”.
The Nasdaq is already in bear market territory.
I would call this a crash.
But Treasury Secretary Scott Bessent is insisting that most Americans “don’t look at the day-to-day fluctuations” of the financial markets…
In an interview with NBC News’ “Meet the Press,” Bessent called it a “false narrative” that people who are close to retiring may be reluctant after their retirement savings may have dropped last week because of the stock market downturn.
“I think that’s a false narrative,” he told moderator Kristen Welker. “Americans who want to retire right now, the Americans who put away for years in their savings accounts, I think they don’t look at the day-to-day fluctuations.
I understand that they are trying to keep everyone calm.
But it isn’t working.
At this point, even the largest Wall Street banks are officially freaking out. They are hitting hedge funds with “Lehman-style margin calls”…
Hedge funds are facing Lehman-style margin calls as a market crash triggered by President Donald Trump’s tariffs raises fears of a looming ‘Black Monday.’
The market’s sharp downturn has forced hedge funds to sell off assets, with major Wall Street banks demanding collateral after the value of holdings sharply declined, according to sources familiar with the situation.
There is now fear that these margin calls could create cycles of forced selling that could drive stock prices down to extremely painful levels.
The sheer panic that we witnessed in New York on Friday was unlike anything that we have seen since the darkest days of 2008…
‘Rates, equities, and oil were all down significantly… it was the broad market movements that caused the scale of the margin calls,’ one prime brokerage executive told the Financial Times.
While, another prime brokerage executive noted: ‘We are proactively reaching out to clients to assess [risk] across their entire portfolios.’
Prime brokerage teams on Wall Street, which lend money to hedge funds, held ‘all hands on deck’ meetings on Friday to prepare for the increasing volume of margin calls, sources told the Financial Times.
Wow.
This is all happening so fast.
A lot of major players that were way out on a limb are going to end up getting their clocks cleaned.
Leverage can be so seductive. On the way up, it can help you make tremendous amount of money, but on the way down it can feel like the world is ending.
As I have always warned my readers, you only make money in the stock market if you get out in time.
Wall Street loves stability, because stability leads to predictability.
Unfortunately for Wall Street, we have now entered times that are going to be extremely unstable.
A number of my readers have pointed out to me that the stock market was way overdue for a correction, and I agree with that assessment very much.
But what we are witnessing at the moment is not just another run of the mill correction.
What we are witnessing is a full-fledged panic.
Will the White House be able to settle the markets down?
I don’t know, but I will definitely be watching.
Without a doubt, it appears that a very “interesting” week is ahead of us.
Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
About the Author: Michael Snyder’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com. He has also written eight other books that are available on Amazon.com, including Chaos, End Times, 7 Year Apocalypse, Lost Prophecies Of The Future Of America, The Beginning Of The End, and Living A Life That Really Matters. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream, and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.
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