Introduction

In August, the data performance of the United States manufacturing industry was poor, with both data hitting multi-year lows. The ISM manufacturing index data was 47.2, followed by the PMI data at 47.9. Both figures were below 50, indicating that the U.S. manufacturing industry has fallen into a state of contraction.

Of course, subsequent data also confirmed this point, and the U.S. manufacturing industry has been below 50 for four consecutive months this year, meaning that the U.S. manufacturing industry has been declining for four consecutive months.

In response to these data, the U.S. stock market naturally continued to decline, with the Dow Jones Industrial Average closing down 1.08%, the S&P 500 index down 0.69%, and the Nasdaq index down even more at 1.11%.

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In this process, the stock price of Nvidia, the most famous semiconductor chip manufacturer in the United States, plummeted by 9.5%, causing Nvidia's market value to directly evaporate by $27.9 billion. This was still in the later stages of U.S. stock trading, so how much would Nvidia's stock price plummet if it were after the market?

It's not just Nvidia; the stock prices of some other semiconductor giants are also affected.

So, what happened during the process of the U.S. stock market's decline, and what should the domestic debt situation in the United States be like?

Semiconductor export controls, Nvidia's performance not meeting expectations.

With semiconductor export controls to China, data shows that the United States earns only 17% of the semiconductor exports to China, but Xiaomi's independent part accounts for 13%, and Huawei also accounts for 12% of the market.

Both Xiaomi and Huawei are sanctioned by the United States, so naturally, U.S. chip sales are also facing a huge decline.The United States possesses advanced semiconductor manufacturing technology, and the chips imported from the US account for half of the global sales of American semiconductors. The US has been reliant on China for many years in the semiconductor sector, particularly in chip sales, which has led to significant operational challenges for American chip giants.

After excluding Huawei from their business, American semiconductor companies have experienced a substantial impact on their sales figures. These chip giants have also begun to gradually reduce their exports to China, with the US preemptively placing orders to occupy as much of Huawei's orders as possible.

For Chinese semiconductor chip enterprises, the US will also impose restrictions and prohibit the export of semiconductor equipment to China, hence the need to keep semiconductor equipment as tightly controlled as possible.

Naturally, if restrictions on semiconductor exports continue to increase, American suppliers will inevitably be affected, ultimately dealing a significant blow to US chip giants.

At the same time, China, being a populous nation with a continuously rising social hierarchy and a large population base, sees a faster frequency of electronic product replacement in households. This presents a promising business opportunity for chip sales.

Moreover, one-third of the global economy relies on the United States, making the US dollar the primary currency for foreign exchange reserves. The majority of global transaction volumes are also dominated by the US dollar, and the US possesses the world's most advanced financial system.

Therefore, the US financial system influences global economic development and trade, as well as global capital flows. Consequently, the largest financial bubble is the US financial bubble.

In fact, the US financial bubble is the world's largest. The reason for the financial bubble is that the US has created 20% of the world's dollars and accumulated them within the country, while also increasing the issuance volume, leading to the inevitable burst of the US financial bubble.However, when the US dollar encounters issues, it can also drive problems in the entire global economic environment, leading to global economic issues as well.

The US debt problem.

In fact, the US Treasury Department began issuing US debt in the 18th century, and US loans are mainly used for war expenditures, such as the American Revolutionary War.

The US has previously issued large amounts of US bonds with Buffett and others, who have purchased more than 400 billion US dollars in US debt. This involves selling the US debt previously purchased by Buffett and others from the central government to financial institutions with private capital, and then having the central bank repurchase the debt that has been purchased.

As a result, Buffett and others have also obtained investment returns from this. In this process, the central bank merely acts as an arbitrator, without incurring any costs or substantial participation. Buffett and others can not only gain more financial benefits through this method but also resist inflation to a certain extent.

Moreover, they can also obtain significant economic benefits. The US loans also have great advantages. Firstly, the US loans have a solid national strength, providing good credit guarantees, strong repayment capabilities, and the ability to repay through Treasury bonds.

Secondly, there is the guarantee of the global reserve currency. The US dollar, as the world's reserve currency, has gained the trust and recognition of many countries around the world, playing the role of a world currency.

This is mainly because the US has a good credit advantage. However, the US debt has been continuously increasing. If the US government's debt continues to grow at the current rate, it could exceed 500 billion US dollars in less than four years.

The main reason for the US debt is that the US government borrows money externally, and the interest on these debts must be paid. The US government pays interest to those who hold US debt every year, and the interest paid annually has exceeded 100 billion US dollars in recent years.

Buffett and others are concerned that the US fiscal deficit has exceeded 20 trillion US dollars, surpassing the scale of US debt. At the same time, the US fiscal deficit is a potential large-scale economic problem.Although the United States' fiscal deficit is not an urgent issue, it continues to expand, and the U.S. often leaves these problems for future generations to resolve. The fiscal deficit in the United States will inevitably lead to financial crises in the future, and the country's debt scale has already surpassed the global GDP. Consequently, the fiscal deficit in the United States is a very serious issue.

As the U.S. debt continues to increase, the interest generated annually will also rise rapidly, eventually occupying the entire scale of the U.S. GDP, leading to inflation in the country. Buffett is concerned that the U.S. debt will force interest rates to be lowered, thereby erasing or weakening the U.S. debt, and also plunging the country into a crisis of devaluation.

The U.S. economy is sluggish.

It is precisely because the recent economic situation in the United States has not been very good, and the interest rates have been reversed since November, being adjusted downward, that the U.S. debt crisis is brewing, and the stock market is also generally declining.

The economic situation in the United States has always been pessimistic, from manufacturing to non-manufacturing, and then to the employment rate of the labor force, all are gradually declining, and are in the stage of brewing a financial crisis.

Many listed companies in the United States are currently facing significant operational pressures, and for Nvidia, its GPU computing power growth rate has not been able to keep up with the growth rate of Bitcoin mining.

This has also led to Nvidia's third-quarter revenue not only failing to meet expectations but also significantly falling short of expectations. As a result, Nvidia has received a considerable number of order cancellations.

This has directly led to a sharp decline in Nvidia's stock price, with the company's market value shrinking by as much as $279 billion. The speed of Nvidia's decline is quite fast, and coupled with the impact of the recent sharp rise in stock prices after a significant drop, this has also caused Nvidia's stock price to be more volatile.The speed of the recent downturn in the U.S. stock market has been extremely rapid, shattering Buffett's safety cushion for U.S. stocks in a short period of time, and returning to the level of two years ago within two years. This means that the room for upward movement is very limited.

It seems that NVIDIA cannot escape the disaster. It is reported that the U.S. Department of Justice has issued a subpoena to NVIDIA, requiring NVIDIA to provide some information needed by regulatory agencies to investigate NVIDIA's monopolistic behavior.

This also makes NVIDIA constantly face the risk of litigation, and U.S. regulatory agencies have questioned some of NVIDIA's business models, such as NVIDIA's GPU computing model.

In addition, there are doubts about the sales business model of NVIDIA's GPUs, and U.S. antitrust laws are very strict on these monopolistic behaviors. Therefore, if NVIDIA does not regulate, it will also face war.

The litigation risk faced by NVIDIA should not be underestimated, because NVIDIA will be interviewed and regulated by the U.S. Department of Justice, and NVIDIA is also required to provide relevant information.

Conclusion

As the U.S. economy faces greater uncertainty, investors should also be vigilant, understand the problems faced by the U.S. economy, and also start to take precautions against risks.

Moreover, the U.S. debt scale is far greater than the debt scale of other countries, coupled with the decline of the U.S. manufacturing industry, which has been below 50 for four consecutive months. This means that the U.S. economy is facing greater difficulties, and the growth rate of the U.S. GDP is also slowing down.