Remember Black Monday, October 19, 1987?? Well, Tomorrow Is The Anniversary Of The Biggest Market Crash In History And, Who Knows What Might Happen!!
Being a genxer, I'm old enough to remember the "dreaded" day of October 19th, 1987, the Monday which would forever live in infamy, as the Dow crashed over 700 points that day. While circuit breakers and regulations in its aftermath, have been effective in preventing another such "big" crash (even at the heights of the global financial crisis of 2008), in today's terms, Black Monday is the equivalent of a nearly 7,000 point drop in a single day!! Let that sink in!! Wiping a quarter of equity wealth is no mean "feat" and for this reason alone, Black Monday is feared by investors and funds alike.
Though the Calendar date of October 19th is this past week, nonetheless, the traders and the broader investment community across the world is "holding its breath" as the new week starts, and so, tomorrow (Day after tomorrow in the United States), Monday, is "THE" day when a repeat of the market rout can very well happen. For one, the Dow closed 300 points lower on Friday, and already Treasuries are swinging "wildly" as I write. Moreover, with Bond Yields hovering at decadal highs if 5%, anxious traders are hoping the markets don't "break" in case the bonds crash continues.
Perhaps the "Black Swan" event (a term coined by famous author, Nassim Nicholas Taleb, denoting a Low Probability, High Impact Event), would be the ground invasion of Gaza by Israel. Or, the "trigger" can be anything from Oil hitting the roof, to further "distress" in the gargantuan US Corporate Debt market. My bet would be on any of these, PLUS, my favorite of a Crypto meltdown. Already Binance is "struggling" under record withdrawals of around $1.4 Billion over the weekend, and with the trial of the bankrupt FTX founder underway, who knows how this would "swing".
Or, mebbe, Monday wouldn't be so dreadful, after all! Another day at the office would surely "soothe" the nerves of many, jangled as they are by the unrelenting stream of bad news all over. Of course, the US economy is "holding up" well and this should reassure us all. However, the "weirdness" surrounding the American economy is something that is bothersome. Sample this! How can we have an effective Fed rate of 5.5% and yet, Inflation continues to be "stubbornly" high? Or, for that matter, how can unemployment be so low, and yet, consumer confidence isn't improving. Maybe the Pandemic "hangover" is yet to subside.
Watch out for the week ahead, as worldwide events can take their "toll" on the markets. Be it the "Implosion" of the Chinese economy or the "stagnation" of Europe, to the very real "threats" from the various wars, there are enough indications that something might just "break" the leeves. Also, a year ago, in October, the UK economy came close to a "meltdown" suffering a "sudden" cardiac arrest for the silliest of reasons! Enjoy your weekend.
#blackmonday #dow
