Global stocks in freefall mode as economic collapse unfolds
China, the world’s second-largest economy, continues to show signs of a sharp slowdown, unnerving investors everywhere as markets begin falling worldwide.
According to Jim Cramer, the Chinese market needs to reset. By his estimation, the Shanghai Composite Index needs to lose 35 to 40 percent of its value. Before that happens, if it does, he warns that there are U.S. companies with stocks which are vulnerable to China’s decline.[1] Another question to consider is what the Federal Reserve’s ultimate decision will be concerning interest rates. Markets must be stable before an interest-rate hike, but as the Dow continues to fall, that scenario seems unlikely:
“The Chinese have created an air of fragility around the globe. Markets will now surely have to firm up considerably for the Fed to pull the trigger next month,” said Deutsche Bank analyst Jim Reid.[2]
