Wait, isn't that going the wrong direction?
Totally true, though. After sailing past 17k, the DOW topped out around 17.5, weakened, and then proceeded to dive off a cliff. After a trading halt and a dead cat bounce, the venerable market marker is in the high 15000s.
So, what happened?
The thing is, no one is really sure. I mean, the Chinese Stock Market has had all sorts of problems, and the government has devalued to the yuan (you knew that the currency there, right?) in order to keep things going. But that has happened weeks ago, and has to be attached by the proviso that the West doesn't think the East knows what it's doing (Mr. Pot? Meet Mr. Kettle).
Or it could be the challenges poised to a dis-United Europe, with German austerity colliding with Greek poverty. But again, that's been going on for some time, and while accounting for the halting of a bull market, doesn't do much to explain the here-and-now of the slide.
Some point to oil prices, which have been low and dropping lower all the time. This appeals to the economic view of "Whatever happens, it's bad for YOU". You'd think lower prices at the pump would a good thing, but it is the result of various oil factions fighting it out with knives in a back alley. So you'll take your three-dollar gas and like it!
Another points to this sudden, massive "correction" as a response to the markets afraid that the Fed, which has kept borrowing rates phenomenally low during the Great Recession, will now get around to raising it a fraction of a point or so. And I'll be honest, that does appeal to the part of me that treats the corporate market as a small petulant child who panics when it seems like he will not get a cookie.
Or it could be none of them. It could be nothing more than a market suspended on happy thoughts and dreams of growth, but backed up with computer programs (William Gibson called them automated agents in his latest book, and nicknamed them "Aunties") sniffing around for the first signs of softening to bail out at the maximum peak.It could be a feature, not a bug.
But the thing I notice most of all, and want to pass on in these early days, is how calm and positive all this has been. After jumping at every noise and financial what-if for years, the market sage heads, confronted with a major jolt, are nodding and saying that a correction (from what error? to what truth) as been overdue, and this too will pass.
Color me suspicious. But then, I leave most of the investing to the Lovely Bride, and don't ask too many questions.
Guy Gavriel Kay Pembroke Lecture - So, thanks to Doug, Andrew, and Dimitra for reminding me about this year's Pembroke Tolkien Lecture. The speaker this year is Guy Gavriel Kay, who famous...
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