- by New Deal democrat
It's a mug's game to comment on major market moves while they are occurring, so take this with multiple grains of salt, but here are some thoughts for your consideration:
1. How much of the moves are real, i.e., real human moves prompted by greed or fear, and how much is computer-driven? Last year's flash crash and the 1987 crash were mainly computer driven, or synthetic. They weren't "real." Once humans realized that, the effects wore off. Some part of the moves in the last week smell computer-driven.
2. Margin calls at 3 p.m. may be driving the late afternoon swan dives, just as they did at the October 2008 climax.
3. As just about everybody has pointed out, this isn't a panic move away from US Treasuries. The better explanation, given the behavior of gold, is that the S&P "really" downgraded the US dollar.
4. In that vein, this crash is similar to the 1998 Asian currency crisis, but in reverse. In 1998, a number of Asian countries could not support their currencies' peg to the US dollar, and their markets tumbled like dominos. Here it is the US dollar that cannot retain its value, and the Euro, which may not be able to retain its existence.
5. That global economic leadership has been transferred to Asia was confirmed overnight. In 1998, the 20% global selloff, in which markets fed off each other's decline, was halted by a reversal day on Wall Street. Stocks sold off big, and then sharply rebounded. Overnight, that's exactly what happened in Asia.
6. There has been some weak economic data recently, but very little has actually rolled over into negative territory. If we don't start seeing actual contractionary numbers, this is just a correction, albeit a particularly severe one.