It's really hard to point to real news driving the market plunge today. Yes, Covid-19 cases are rising in many states; the Fed thinks the econ outlook is still dire; the Trump admin inspires no confidence; a lot of stock buying looks bonkers. But we knew all that 1/
Fwiw, I thought the market surge from late March to mid-
April made a fair bit of sense. We almost had a financial meltdown in March, but the Fed contained it, so a rebound from those lows was reasonable. But the more recent runup was different 2/
April made a fair bit of sense. We almost had a financial meltdown in March, but the Fed contained it, so a rebound from those lows was reasonable. But the more recent runup was different 2/
It seems to have been driven by small investors who tuned out all the warnings that the coronavirus was by no means under control, that we'd face a severe fiscal shock when emergency aid expired and local governments hit the wall 3/
Maybe those warnings have gained some strength over the past week. But this looks mainly like a Wile E. Coyote moment: exuberant investors looked down, realized that there was nothing supporting their euphoria, and down we went 4/
