What the Heck Just Transpired in the Global Markets?…”Stocks, junk bonds, oil, and the bitter whiff of international chaos”

Sunday, December 14, 2014
By Paul Martin

by Wolf Richter
December 14, 2014

An ugly week, topped off by an even uglier Friday. It started going off the rails in Europe. Greek stocks had crashed 20% in the prior three days, and Friday brought no bounce. There were fears of a renewed debt crisis, or even a Grexit, and the possible break-up of the Eurozone. If Greece would be allowed to exit, maybe Italy, Spain, or France would be allowed too.

It didn’t help that Ukraine is marching vigorously toward a default unless it gets many more bailout billions from taxpayers around the world – to be absorbed in record time by oligarchs and whoever holds power at the moment. Russia’s government warned of a recession in 2015, given the sanctions and the plunging price of oil. Russians are fretting about their rubles that have lost their footing entirely. China’s economy is approaching what is stall speed for China. Japan’s economy is in a deep recession while drowning in freshly printed money….

Friday was particularly unsightly. That lovely last-minute mysterious upward burst that we have become accustomed to and that has bailed out so many Fridays in this central-bank-powered multi-year rally? We don’t care where that burst comes from, we just rely on it. But this Friday, the bottom fell out at the end of the day. This left the S&P 500 down 1.6% for the day and 3.2% for the week, off the record close Friday a week ago. It was the worst weekly drop since May 2012.

This hourly chart of the S&P 500 for the week shows the drama of the last hour. Note how the S&P 500 dropped 52 points, or 2.5%, in a day-and-a-half from its glorious intraday high on Thursday.

The Rest…HERE

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