Japan’s Nikkei 225 (NIK), back where it had been 35 years ago: Back where it had first been in January 2000.From January 2018 all-time high: -48.6%.Hong Kong’s Hang Seng Index (HSI), back where it had been 24 years ago: Back where it had first been in January 2007.

Now inflation has resurged in all developed economies, there has been an inflation shock, and we’re in a different ballgame.Ĭhina’s Shanghai Stock Exchange (SSE), back where it had been 17 years ago: Money printing and 0% were an option back then because inflation was below the Fed’s target inflation was low in all developed economies. It did happen in the US markets though, when the Nasdaq plunged by 78% during the dotcom bust from March 2000 to October 2002, and then didn’t get back to its March 2000 high until 15 years later, until October 2015, and it only did so because of huge amounts of money-printing and 0% interest. Yes, we all know, this cannot possibly ever-never happen in the US markets because US markets are special. We’re going to stick to the major markets of the largest economies that have had relatively stable currencies and relatively low inflation – 6% year-over-year inflation being relatively low compared to 160% year-over-year (Argentina).

The 1,700% spike in Argentina’s Merval Index in three years, from about 51,000 in January 2021 to 930,000 now is a sign of the collapsing peso, and not of corporate performance. When that currency’s purchasing power plunges due to inflation year after year for decades, then stock market indices are a reflection of inflation more than of corporate performance. Stock markets are valued in local currency. I bring this up because US markets have been among the exceptions, not the norm in terms of global stock markets.įirst a ground rule here. It was a funny year for US stocks, with the magnificent 7 stocks carrying the markets, with the Dow and the Nasdaq 100 setting all-time highs, while the S&P 500 ended a hair below its all-time high two years ago, while the Nasdaq ended somewhat further below its all-time high in November 2021, and while the Russell 2000, which tracks 2000 smaller stocks, ended where it had been three years ago. Most major stock markets globally rose in 2023, some by a lot, but a bunch of them are still below their all-time highs 15 or 20 or 35 years ago, while others are barely above those all-time highs from a generation ago. This cannot possibly happen to US markets because US markets are special? By Wolf Richter for WOLF STREET.

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