Black Friday 1987

I was a skeptic, but "Trump thinks 'asylum' means the person came from a mental institution, and that's why he keeps mentioning Hannibal Lector" actually seems to be real? pic.twitter.com/i4lMFdoqXm

— Alex Griswold (@HashtagGriswold) August 5, 2024

So...

“This is very reminiscent, so far, of 1987,” Yardeni said on Bloomberg Television’s Bloomberg Surveillance. “We had a crash in the stock market — that basically all occurred in one day — and the implication was that we were in, or about to fall into, recession. And that didn’t happen at all. It had really more to do with the internals of the market.” 

Among the reasons cited for the current plunge in equities has been an unwinding of bets that took advantage of near-zero funding costs in the Japanese yen to invest in other assets. That so-called carry trade was undermined by the Bank of Japan’s interest-rate hike last week and pledge to consider further moves. Traders have also pointed to an unwinding of bets on big US tech companies. 

.... 

Among the reasons cited for the current plunge in equities has been an unwinding of bets that took advantage of near-zero funding costs in the Japanese yen to invest in other assets. That so-called carry trade was undermined by the Bank of Japan’s interest-rate hike last week and pledge to consider further moves. Traders have also pointed to an unwinding of bets on big US tech companies.

So is this drop due to employment numbers sparking fear of a recession? Or because the Bank of Japan raised interest rates and Warren Buffet adjusted his portfolio, and the cows spooked?

The answer is: nobody fucking knows. Educated (and blinkered, parochial nonsense masquerading as educated) guesses are offered and pundits gravely blame politicians (or say the people, who are barely paying attention, blame politicians). All I can say is I was working for a lawyer who was heavily invested in the market in ‘87 (when trading without benefit of a broker or an advisor was novel and proof you were “smart.” And this guy was quite convinced he was “smart”) on Black Friday. The DJIA fell 508 points, or 22.6% (it was a much smaller market 37 years ago), and everyone thought we were done for, including this lawyer. He took a big hit.

Within a week, he was fine. Within a month, he’d recovered completely.

The DJIA today fell over 1000 points; or about 2.6%.  More like a correction, really.

All the MAGAts crowing on Twitter about “Kamala’s Crash” (yes, that is a thing) will have forgotten they should be eating crow by the end of the week. They think everyone’s retirement plans have been wiped out. By a 2% correction in the market.

They probably expect Warren Buffet to be calling them for investment advice…

They really got nuthin’….