Thank you for the question. I think you are trying to see if the markets start to fall, will this stop the inflation side of things?
I agree discretionary spending appears to have fallen through self imposed lockdowns and further concerns in various places around the globe.
As to personal savings, I am not sure these have gone up. If people are not spending, then some common sense might have prevailed and they put the excess into loans to reduce those, but more likely, people invested into various stock markets around the globe. @onetricky and @JethroJ have shown information that in the US money poured into the markets USD 800 billion a day in the Xmas Rally!!! This was in the hope of the stock market providing for their future.
If you have a chart or some information showing personal savings over the last 3 months or similar that would be appreciated.
As a side note, we have seen massive amounts of people leaving jobs, I guess due to their wins on shares and cryptos... Leaving jobs is not likely to add to personal savings. And last week I think we got the highest job claims in a while. Maybe this strategy hasn't worked out too well for everyone and they are going back to work or getting benefits.
As to exacerbate the above and If a bear market, I am not sure and will require a bit of in-depth discussion because how this eventuates will determine the answer...
How would a bear market play out? This will depend on the major players and how they wish to go forward. Do they continue selling down steady or manipulate with days of up and down etc. Exacerbate is based upon the mind set of the majority and @onetricky has pointed out there are 80% longs on IG - this means a very receptive market with lots of buyers still available Monday. The majors already have their game plan; they want to reduce / sell down before QT but without scaring investors.
If you consider that major investment funds have spent many millions on trading software and creating algos to run their plans, they COULD make anything appear the way they want. I think this was demonstrated by what I pointed out yesterday; The Dow and Nasdaq futures both closed on key potential bounce levels. Coincidence or manipulated to achieve this? I think the second and likely goes hand in hand with not creating panic... Imagine if these closed a little too high, then the fear is it might fall to the bounce line and pass through. If they had gone through the level, then that was broken and panic is likely to set in. The same happened with XJO Friday, but we had a 15 point bounce (I think) - Does this instil confidence of a run Monday, I would say yes.. 80% said yes remember
In addition, they have their voices to assist in maintaining calm and be zombie (Thanks @JethroJ) traders. Cramer, CNBC presenters, JPMorgans.. keep listening to them while this is falling.
As such, there is a good chance for a push up... How far, it really doesn't matter, because when it turns Monday, Tuesday or Wednesday (it shouldn't be long), it will hit harder than Friday. These days might be additional shorting opportunities as I have mentioned before. Alternatively, the markets might stay sideways in a small range trade while the funds use this time to unload mega amounts of shares.
I will say, once the breaks lower occur from all these key points, these will be massive; maybe >10% drops in a day. The big players wont let anyone switch without a massive cost. If you are long, you will close out with a massive hole in your pocket (especially if you are on margin - ouch). If you play derivatives, then the delta, gamma, theta, rho, vega's (anything I missed lol) will be massive and the fees to go short will be excessive due to massive volatility. You have missed the best opportunity when we all mentioned this since pre - Xmas.
So getting back to exacerbate your initial points. If a bear outcome is slow, then a continued reduction in discretionary spending and potential personal saving (and this would be into bank accounts) is likely to occur.
If a bear outcome is as I suggest with >10% drops in a session, then this creates panic but also creates margin calls... There will be no personal saving, and spending will diminish to zero with expenditure on food and essentials only... Everyone (except the bears) will go into survival mode (and I would suggest the same of bears too).
If the powers that be (and I don't mean governments) want this to topple over completely, then the second outcome is most likely... If you want to grow your billions faster, then sell everything at the top and buy again at the bottom... Most people will not have that opportunity.
Deflation is when all assets reduce in value. In either of these scenarios, this would be the likely outcome. Lets cut interest rates.. oh we can't as they are zero
Now I read somewhere or watched a video or maybe someone posted it here, but the US Fed has a plan to buy shares in the event of a collapse... Who is going to control all the assets of the world.. The Billionaires and the US government at least. Who does this benefit, not the masses
My image of bear market is nothing like we have seen before. Others will disagree, and that is fine. I have placed mental notes of all the information that has been provided by those posting here from the last few months and it doesn't look good.
(20min delay)