The dream of a “soft landing”—where the Federal Reserve tames inflation without crashing the economy—appears to be dying. The synchronized sell-off in crypto, stocks, and commodities suggests that investors are now pricing in a “hard landing.” The loss of $1 trillion in crypto wealth and the slide in the FTSE 100 are symptoms of an economy hitting the brakes too hard.
The culprit is the “higher for longer” interest rate environment. By delaying rate cuts, the Fed is keeping pressure on the economy. This pressure has popped the speculative bubbles in AI and crypto. Bitcoin’s drop to April lows is the financial equivalent of a canary fainting in a coal mine.
Corporate leaders are sensing the danger. Sundar Pichai’s warning about “irrationality” and Daniel Pinto’s prediction of a “correction” are essentially warnings that the economic fundamentals cannot support current asset prices. If the economy slows down while valuations are sky-high, a crash is inevitable.
The global nature of the sell-off—from the Nikkei in Japan to Wall Street—confirms that this is not a localized issue. The liquidity that kept the global economy afloat is drying up.
As fund managers name the “AI Bubble” their top risk, the narrative has shifted from “growth” to “survival.” A hard landing means lower earnings, lower stock prices, and a painful reset for everyone.
Markets Crash as “Soft Landing” Hopes Evaporate
