On Your Mark, Get Set, . . . Crash? (Updated)

So, I’m back from my overseas idyll, which included bagging a lion I hastily renamed Cecil (see photo below), and which means the usual jet lag, a large pile of snail mail, and lots of undone work even further behind than usual. Anything much happen while I was away?

Wait . . . the stock market did what?

As I write, about an hour before the Monday morning open on Wall Street, China’s stock market tumbled another 8 percent this morning, though that might be just a reaction to Wall Street tumbling 800 points on Thursday and Friday of last week. But I note Dow Jones and NASDAQ futures, as of this moment, have slipped by a full percentage point in just the last hour, with the NASDAQ indicated to open as much as 200 points—or 5 percent—lower. So, could be a wild day today. I offer no predictions (except this: the Fed will postpone the interest rate hike that had been thought to be coming this month), but only Milton Friedman’s classic observation: “Markets will fluctuate.” Maybe time to buy if you have a strong stomach?

Everyone is watching China nervously. My pal Steve Hanke at Johns Hopkins University thinks the riddle of China is simple: the Chinese money supply has been contracting, as shown in this chart:

China Money copy

Perhaps Steve is right, but what do you suppose China is going to do about it? Headlines like this (from this morning’s Wall Street Journal) make me very nervous: “China to Flood Economy With Cash as Global Markets Lose Faith.” Great—a faith-based economy. Yuan to invest there right now? Neither do I. The Journal story ratifies something I said here last week:

[O]ne reason markets have been so unnerved is that China’s economy remains something of a black box. For starters, analysts have long wondered about the accuracy of government economic statistics.

In the meantime:

Me and my Cecil.

Me and my Cecil.

Horror at the Hermitage: "What do you mean Trump is in the lead?!!"

Horror at the Hermitage: “What do you mean Trump is in the lead?!!”

UPDATE, 9:45 eastern time: Yup, Dow Jones off around 850 points at the open.  Close to automatic shutdown time.  Stay tuned.


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