"Epic Plunge of US Stock 'Seven Sisters'"

What's going on? Have the U.S. stock market's "Seven Sisters" collapsed?

As the expectation of a U.S. dollar interest rate cut is delayed and the dollar continues to strengthen, the U.S. tech giants have experienced an epic plunge, causing a global market uproar.

Is it really because they rose too sharply before and are now starting to adjust? Or is there a major problem with the U.S. economy? The dollar has launched its final battle, and Japan has already set off a storm of blood and rain.

Today, let's talk about the deeper meaning behind the U.S. stock market's plummet. It's not easy to write, so welcome to like, share, and save.

Unprecedented, plummet

The so-called U.S. stock market "Seven Sisters" refers to Microsoft, Apple, Google, Nvidia, Amazon, Meta, and Tesla, these seven tech giants. The market value of just these seven companies accounts for 29% of the total market value of the S&P 500.

However, just last week, these U.S. tech giants collectively experienced their darkest moment. In just one week, their combined market value evaporated by $960 billion, equivalent to 6.9 trillion yuan, setting a record high.

6.9 trillion yuan, what is this concept?

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It would be enough to repay Evergrande's debt three times with change left over. Even if you add up the total market value of Pinduoduo, Tencent, Alibaba, and PetroChina, it's just "only" this much.In other words, the U.S. stock market's "Seven Sisters" took just a week to wipe out the value of so many companies.

The recent plunge in U.S. tech giants was triggered by a piece of news from Advanced Micro Devices (AMD), a stock market darling:

This tech company, which soared by 246% last year, had originally planned to announce its third-quarter financial results on April 30th, but it failed to release its earnings guidance as scheduled.

According to the U.S. stock market convention, companies should provide preliminary earnings expectations before releasing their financial reports. Now, AMD has broken with tradition, leading to concerns:

Is there a major bombshell about to be dropped, to the extent that they dare not even release earnings guidance?

Following AMD's plunge of 20%, tech stocks collectively fell, and even the entire U.S. stock market followed suit, with the Nasdaq and S&P 500 indices falling by 5.52% and 3.05% respectively last week, and the Nasdaq index also dropped nearly 900 points.

However, the most puzzling aspect here is that performance fluctuations in the U.S. stock market are quite normal, especially for tech stocks. So even if the market expects these tech stocks to generally underperform expectations, it should not trigger such a significant drop.

What is the real reason behind the plummet of the U.S. stock market's "Seven Sisters"?

Why did the U.S. stock market's "Seven Sisters" plummet?

The sharp decline in these tech giants in the U.S. stock market, in contrast, the industrial index slightly rose, with the Dow Jones index increasing by 0.01% last week.So some people have started to say that this is the beginning of the AI tide receding, and people are once again turning their attention to the industrial sector, pinning their hopes on the resurgence of American manufacturing.

Take Warren Buffett, for example; even this god of stocks is selling off Apple and turning to oil stocks, not to mention the numerous followers of the stock god, who may also follow suit.

It's important to remember that Buffett once praised Apple as "the best company Berkshire Hathaway holds" and said that "the iPhone is more important to consumers than their second car."

Now even Buffett is "moving away" from tech stocks, which seems to represent a certain trend.

However, here comes the 'but' – perhaps it's true that people no longer favor tech stocks, and this has indeed led to a significant drop in the stock prices of these tech giants to some extent, but it's obviously not the root cause.

Essentially, what is the fundamental factor that drives stock prices up?

The answer is money, or capital. Only with a large influx of capital can the market be vibrant, and stock prices can experience roller-coaster-like increases.

Conversely, without money, no matter how good a company's performance is or how bright the future it paints, it's all for naught.

So from this perspective, the fundamental reason for the plummeting stock prices of the US "Seven Sisters" is actually the flight of dollar capital, with a considerable amount of funds no longer participating and fleeing.

Last year, US tech stocks soared, with many companies' stocks doubling in value. How could these dollar capitals just run away like that?The main reasons are twofold. First, the current AI market is overheated, and no one would think that these tech stocks will keep soaring indefinitely, so there will be a retreat sooner or later.

Second, capital is always profit-driven, and now there is another piece of fat meat in front of us, how could these dollar capital not be tempted?

At the same time as the sharp drop of the U.S. stocks "Seven Sisters", a huge storm also erupted in the yen market, and the capital from Wall Street started a feast.

Shorting yen, harvesting Asia?

Also last week, Wall Street capital collectively shorted the yen, and the yen hit the largest drop in 34 years, once breaking through 154.

Not only the yen, including the Korean won, Indonesian rupiah, Vietnamese dong, Philippine peso and other currencies, the drop is also very tragic.

For example, the Korean won has already broken through the key point of 1400, setting a new high since October 2022.

Shorting yen, the collective collapse of Asian currencies, will it usher in a big harvest of Wall Street capital?

To be honest, it's not impossible.

In the past, the United States created the "dollar tide", to put it bluntly, it is actually to wait until it breaks through the exchange rate defense line of other countries, causing its domestic assets to plummet, what stocks, houses, more importantly, some minerals, manufacturing industry and so on, will be taken away by Wall Street capital at a low price.This is also why Wall Street capital collectively chooses to withdraw from U.S. tech stock giants; after all, where's the thrill in playing the stock market compared to the excitement of "mowing the leeks"?

Of course, on the other hand, it's also because the U.S. has been raising interest rates to the point of diminishing returns, forcing the initiation of this "final battle": the banking industry is under collective pressure, and the U.S. debt scale is soaring. If they don't recoup some losses now, they might be the ones to implode eventually.

Some might worry here about Asian currencies being under collective pressure, whether the Chinese yuan can still hold up, and if we might also become the target of Wall Street capital's harvesting.

Despite the fact that the yuan does indeed experience some short-term fluctuations, our vast foreign exchange reserves make such worries entirely unnecessary. The Japanese yen and the Chinese yuan simply do not have any comparability.

Moreover, it's worth mentioning that Asia may not be as easily manipulated as the U.S. imagines, and its envisioned "harvesting journey" won't be as smooth. The upcoming plot will be more exciting; we might as well wait and see.

In conclusion:

The plummet of the U.S. stock market's "Seven Sisters" is due to the precarious situation of the Japanese yen, which is currently being "trampled" by Wall Street capital.

However, speaking of it, this is a routine operation for Wall Street capital. These profit-chasing capitals are like vultures hovering over the globe, flocking to wherever they smell blood, to feast on the flesh and blood of their prey.