The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Black Monday?

Posted on | June 7, 2010 | 7 Comments

Probably not. It would be foolish to think that Wall Street would repeat Friday’s performance when there were more bears than a birthday party for Andrew Sullivan and the Dow fell 324 points. The more likely scenario today would be for the Dow to regain a hundred or so points. On the other hand, Asian markets tanked this morning:

Asia stocks dropped the most in 15 months and commodities declined after a smaller-than-estimated increase in American jobs led to a rout in U.S. equities. . . .
“The market is groaning under the weight of excessive debt levels and there’s a lot of concern over the state of European banks,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “Hungary is just another straw being piled onto the camel’s back.”

Of course, this was the first day of Asian trading after Friday’s sell-off on the U.S. market, so this may be just a delayed reaction that won’t lead to further losses on Wall Street today. But I’ve recently begun checking for the recurrence of a particular phrase:

Markets hit by Hungary worries and double-dip recession fears
— Financial Times

Economists have begun to lower their forecasts for the first time since the recovery began in the middle of 2009. Allen Sinai, chief global economist at Decision Economics . . .
“The risks to the recovery are growing,” the New York- based Sinai said. “We’ve raised the odds of a double-dip recession to one in four from one in 20.”
— Business Week

The economy eked out 0.3 per cent growth in the first quarter of the year, official figures showed last month. This was revised up from an initial estimate of 0.2 per cent after data from the manufacturing sector that was stronger than expected. But fears over the possibility of a period of stagnation or even a double-dip recession remain.
— Times of London

If investors have lost faith in recovery and are starting to fear the dreaded double-dip recession — as I most certainly think they should — then the Dow might sink even lower today. But if I could predict the stock market, I probably wouldn’t be blogging for living, would I?

Category: Economics

Comments

7 Responses to “Black Monday?”

  1. Virginia Right! News Hound for 6/7/2010 | Virginia Right!
    June 7th, 2010 @ 9:33 am

    […] Black Monday? […]

  2. Joe
    June 7th, 2010 @ 1:46 pm

    The Dow dropping 1000 points is a symptom. The patient is sick and not getting better.

  3. Joe
    June 7th, 2010 @ 9:46 am

    The Dow dropping 1000 points is a symptom. The patient is sick and not getting better.

  4. Pat
    June 7th, 2010 @ 3:11 pm

    Arthur Laffer in today’s WSJ:

    When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe “double dip” recession.

  5. Pat
    June 7th, 2010 @ 11:11 am

    Arthur Laffer in today’s WSJ:

    When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe “double dip” recession.

  6. Joe
    June 7th, 2010 @ 9:49 pm

    Off topic, but this exchange about the blown call on the almost perfect game last week is…

    Perfect Erin Burnett is a sweety and very cute. But Mark Haines is right.

    Of course, the next day, he had to apologize for his joke thought crime.

    Oh well.

    And because I am probably going to hell anyway for taking Haines side above….RIP Gary Coleman.

  7. Joe
    June 7th, 2010 @ 5:49 pm

    Off topic, but this exchange about the blown call on the almost perfect game last week is…

    Perfect Erin Burnett is a sweety and very cute. But Mark Haines is right.

    Of course, the next day, he had to apologize for his joke thought crime.

    Oh well.

    And because I am probably going to hell anyway for taking Haines side above….RIP Gary Coleman.