“I had a stick of CareFree gum, but it didn’t work. I felt pretty good while I was blowing that bubble, but as soon as the gum lost its flavor, I was back to pondering my mortality.” Mitch Hedberg
When the news about U.S. markets and the U.S. economy is depressing, I usually read about Europe and feel better about the U.S.
I spent a lot of time reading about Europe this week, but it didn’t do much good – even with Greece continuing to defy logic by pretending that it’s OK to live off of someone else’s money.
The problem is that easy money policy is not so easy anymore. It never did prop up the U.S. economy, in spite of Keynesian enthusiasm, but at least it created the illusion of economic health by propping up the stock market. Now, it’s unable to do even that.
U.S. markets fell throughout the week, but especially on Wednesday, which saw declines of more than 2% in the Nasdaq and Russell 2000. The Dow dropped nearly 300 points, or 1.6%, while the S&P 500 finished the day about 1.5% lower. The New York composite stock exchange is now back to where it was last July and the S&P 500 is approaching November levels.
And there’s likely to be more trouble ahead, as a 4% drop in the biotech and semiconductor sectors showed a “classic parabolic reversal,” according to Peter Boockvar, chief market analyst at the Lindsey Group. A parabolic reversal is a technical indicator that signals a change in an asset’s momentum.