Autumn season in global markets
The season of anxiety has arrived in global markets. With trade wars and geopolitical tensions, the risk of a stock market bubble bursting is growing. In a period where historical crisis dynamics could be triggered, a potential collapse may directly shake the real economy and the lives of millions.
As summer ends and a sense of melancholy settles in with the end of holidays, concerns in the global economy are rising. Above all in the US, the overinflation of global stock markets has become increasingly clear. The post-holiday period, when new positions are taken and portfolios reassessed, is often marked by turbulence and crises. That is why markets are now under tense anticipation.
The Jackson Hole meeting, watched closely since the early 1980s when then-FED Chair Paul Volcker implemented high interest policies against chronic inflation, took place last week. FED Chair Jay Powell gave a “dovish” speech, interpreted as a signal that interest rates could be cut in September. It is unclear whether Powell, whose term ends in May, adopted this line to shield himself from Trump’s wrath, as Trump persistently demands low rates or whether he truly cares about signs of slowdown. His emphasis was that Trump’s tariffs, which fuel inflation, are offset by labour market weakness, i.e. insufficient job creation. He also voiced concern that rising prices may drive up wage demands, expressing this in an “anti-working class” tone.
RISKS AHEAD
Economic turbulence usually arises when one trigger sets off long-accumulated crisis dynamics. Today’s fragile global context holds plenty of such risks.
First, public and private debts in many countries have reached frightening levels. Trump’s “big beautiful budget”, avoiding taxing the rich, is breeding huge deficits. This means rising debt and persistently high interest rates. Trump’s appointee to the FED board, Stephen Miran, has floated “eccentric” ideas such as forcibly swapping government bonds for longer maturities or imposing extra taxes. This pushes investors away from US bonds and raises borrowing costs. Meanwhile, Trump has punished major US bondholders such as Japan in the “trade wars”, fuelling further tension.
Second, the constantly changing tariff landscape heightens uncertainty, complicating investment and stockpiling decisions. Since importers ultimately pay these tariffs, rising costs risk being passed on to consumers directly while also hitting producers’ inputs, weakening competitiveness across sectors. The likelihood of a slowdown is growing.
Third, optimism has been propped up largely by advances in artificial intelligence (AI). Stock indexes have held up thanks to technology shares led by AI. Yet despite massive investment in generative AI, apart from NVIDIA, companies like Amazon, Microsoft, Google, and Tesla have not achieved satisfying revenue or profit. Once this fact becomes clearer, it may fuel sell-offs in stock markets.
Fourth, geopolitics remain grim. With Israel’s genocide in Gaza ongoing, peace is absent on all fronts. Israel’s latest aggression extending to Yemen has stirred turmoil especially in commodity markets.
Fifth, real estate markets pose systemic risk, as in the 2007 financial crisis. Housing prices remain high in the West, but commercial property is struggling due to widespread remote work. A sharp stock market fall could spill over into real estate. Declining asset prices in general would spread a sense of impoverishment, weakening demand through the “wealth effect” and pushing the economy into recession.
Sixth, climate change is increasingly felt. Natural disasters are becoming more frequent. This summer’s extreme heat and drought slowed economic activity and hurt agriculture. The presence of leaders like Trump, who dismiss climate change, back fossil fuels, and undermine renewable energy incentives, suggests heavier problems ahead.
IF THE BUBBLES BURST
The combined effect of these factors may well amplify capitalism’s inherent crisis tendencies. A bursting of stock market bubbles is possible. After Trump announced tariffs on 2 April, indexes fell, but then rebounded to nearly 30% above their 8 April low.
The S&P 500 rose under chipmaker NVIDIA’s lead. Its market value hit 4.3 trillion dollars, one and a half times the entire FTSE 100 index. Microsoft, Alphabet, Apple, Amazon, Tesla, and Meta all surged. According to Financial Times columnist Robert Armstrong, the top 10 shares in the S&P account for 40% of total index value. Since 8 April, 56% of gains came from these stocks. They captured 55% of net profits and made 69% of capital investments. Meanwhile, manufacturing, energy, and consumer staples declined.
The “momentum effect” the idea that because stocks have risen, they will rise further, was strongest in tech shares. Their sharp leaps were also driven by buybacks. According to the Wall Street Journal, such buybacks have neared 1 trillion dollars since the start of the year.
So what if the markets, celebrated by Trump as proof of economic health, go into correction? Should those without stock investments be expected to watch with a grin over chips and beer? Unfortunately not. Stock market crises also hit the real economy, opening the door to unemployment and deepening poverty. Except for short-sellers rubbing their hands, everyone stands to lose.
Note: This article is translated from the original article titled Küresel piyasalarda hazan mevsimi, published in BirGün newspaper on August 26, 2025.
