The Wonderful Thing About Markets? They Bounce
This was a “dead-cat bounce” — an adjustment after an extreme move
There is no particular reason to think that the Wednesday bounce signaled the end or beginning of anything.
Rather that it affirmed markets’ eternal tendency to overshoot in both directions, and for shocks to cause more volatility.
I would like to remind everybody that 60% of the market’s moves last year were after market hours... you’re going to get more moves at the openings than you will during market hours.
The adverse move in the eurozone’s terms of trade proves to be a 20-standard deviation event. In other words, it’s so statistically improbable that it boils down to a high-falutin’ technical way of saying that it can’t happen.
Europe has an additional problem, in that banks, rather than capital markets, remain its main financing conduit
The latest selloff has brought European banks down to barely half their book value.
Food price inflation can create serious problems for governments of developing countries. Albert Edwards, the famously bearish investment strategist at Societe Generale SA in London, demonstrates the extent of the problem that could lie ahead in this chart
John Authers Bloomberg 10 March 2022
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