Are Big Tech Stocks Following in the Footsteps of Their Chinese Counte – Moneyshow.com

In a year filled with notable market phenomena, one of the more notable of 2021 was the dramatic divergence between US and Chinese tech stocks, states Jesse Felderof The Felder Report.

While the former consistently surged to set new highs, the latter crashed, giving back all of its gains since the onset of the pandemic and then some.

The popular reasoning for the crash in the Golden Dragon China Index (HXC) argues that the Chinese government crackdown on many internet-based businesses was responsible for a major reset in the valuations of the associated equities. While this may be true to some extent, it is also true that the downturn in the Chinese credit cycle may have played a major role, as well.

It is also true that there is now bipartisan support in Washington for a crackdown on Big Tech here in the US. Of course, it wont look exactly the same as Chinas crackdown but the impetus for both is very similar, if not identical. However, just as for Chinas tech stocks, a major shift in monetary policy may be even more ominous for the valuations of US tech stocks, as represented by the Nasdaq 100 Index (NDX).

In fact, more than anything else the expected future direction of the Feds balance sheet may help to explain the recent weakness in the stock market, which has been led by the tech sector. And if the Fed follows through with its forward guidance in this regard, the valuation reset in big tech stocks may be only just beginning.

Learn more about Jesse Felder atTheFelderReport.com.

See the original post here:

Are Big Tech Stocks Following in the Footsteps of Their Chinese Counte - Moneyshow.com