Are we hitting speed bumps or getting speed wobbles.
I would hazard that the current volatility is more like speed wobbles.
The market has risen substantially and really without much correction for more than 9 months. That is a long time in market years. The first inkling toward an arresting of that trend were speed bumps. Signs of a deceleration in market trajectory. We have been climbing the wall of worry, accumulating worrisome baggage even as the market reached higher levels. The previous all time high seemed like a talisman, calling us forward. The problem with a wall of worry is that worry eventually has an effect. Markets can live with self-delusion for quite a while.
It looks to me that we are now entering the next phase of correction. How big will it be? 10% 20%. Calling those things is a mugs game, but with full central bank support, I expect some kind of official response once we get down around 10%.
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