Sometimes it’s just a flash crash. Other times it’s a crash crash. And in those case here are things that happen (keep an eye out):
Busted deals
- IPOs pulled – eg Klarna
- M&A canceled – Q1 was a record high
- Equity and debt financings shelved
- New investments iced – factories
- Products canceled – eg Nintendo Switch 2
Cash preservation
- Tax revenue falls
- Opex budgets cut – layoffs, hiring freezes
- Banks don’t lend or refi – shore up their lending portfolio because they expect failures
Blowups
- Failed refinancings = bankruptcy
- Failed fundraises = bankruptcy
- Margin calls on leveraged portfolios = fund blowups
- Banks get merged
If it’s a real recession that follows (it would given the above), then you get some “silver linings”
- interest rate cuts
- re-flood to stock markets
And you get some more problems
- incumbents raise first and best, getting stronger
- regulators come to fix the systemic risks uncovered “this time”
- elections swing
- unemployment and general popular misery
https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets