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