Falling Stocks Reflect a Darkening Reality
|Stocks fell hard Thursday, supposedly because of growing US-Saudi tensions over the gruesome murder of Jamal Khashoggi, a journalist who has been tough on the monarchy and easy on the Muslim Brotherhood. If such tensions did in fact push stocks lower, as a headline in the Wall Street Journal tried to suggest, then why didn’t oil prices rise? After all, the Saudis, pressed to admit the murder was officially sanctioned, have told inquisitors to back off — either that, or risk a curtailment of crude supplies that would push prices into the danger zone in a world dependent on cheap oil.
For better or worse, it is not tensions over the murder that have been worrying investors, but rather the upward skew of interest rates. This development has reached a menacing threshold where a global economy as dangerously dependent on cheap credit as it is on energy could start to falter. Economic growth in Europe and Asia has already slowed significantly, although not yet appreciably in the U.S., where bull-market mania evinced nary a hint of concern until very recently.
Gird for a Fearsome Friday
Expect those concerns to snowball on Friday as traders wrap up another week by further discounting a darkening reality. The erstwhile Masters of the Universe couldn’t bring stocks back even a third of the way Thursday after selling the Dow down 470 points. My hunch is that DaBoyz will apply a feather-light touch in the wee hours Friday, distributing what little stock they can to widows and pensioners; then, following a flurry of short-covering on the opening, they will pull the plug.
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