“We haven’t seen something like this since the Brexit vote.” “Just … a bit of a breather.”
Which analysis explains the unnerving drop in the stock market this week? The Dow Jones had a rough Monday, falling by 1,175 points for the worst single-day point drop in history. Wall Street had been enjoying months of a steady rise before Monday’s panic.
On today’s show, Glenn warned the audience that even if Monday’s stock market dip wasn’t the real thing, we are headed for a “massive reset” in the economy.
“I don’t think this is it, not yet,” Glenn said. “I believe this is just a correction.”
EDITOR'S NOTE: This article provided courtesy of TheBlaze.
Scott Olson/Getty Images
This is a rush transcript and may contain errors.
GLENN: Yesterday, the Dow Jones Industrial Average dropped 1175 points. Today, it’s down right now about 10 points. It was the largest single-point drop on record. But that doesn’t really mean anything. Because, you know, the Dow is at 25,000.
The performance came on the heels of the Dow falling 665.75. Not 666, on Friday.
You can round it up. But that’s not the way numbers work. Barely two weeks ago, the Dow peaked at 26,616. Then between last Friday and yesterday, it lost over a month of gains. It’s the worst two days the stock market has seen in almost two years. However, the market is still up 26 percent in the last year. The typical annual growth is about eight.
Too much, too fast perhaps. One director at the brokerage firm said, this is the first time in a while I’d say it feels like borderline panic-type selling. We haven’t seen something like this since the Brexit vote.
But a director at a different firm said, the markets are just taking a bit of a breather, which I’d argue is somewhat healthy. Yes. Things like this actually slow down a melt-up. You don’t want money to just keep piling in, piling in, faster and faster and faster.
That’s dangerous. So is this a snowball, or is this just really nothing? Is it a snowball that’s going to lead to an avalanche, or a snowball that’s going to be made into a snowman?
Some bond investors are spooked about there being more inflation on the horizon than they originally forecasted. In its effort to slow down inflation, the Federal Reserve has caused a lot of problems in the past, when it becomes overly jumpy and tweaks interest rates too much. Investors got nervous that the fed might do this and do their usual tinkering and make things worst yesterday. A lot of this over the past couple of days is psychology.
The market has gone so high, people are worried that it doesn’t make sense for stocks and bonds to stay at the level that they are, so they’re tapping the breaks. But what happens if the breaks are out and we’re headed downhill? That’s possible because the last hour of trading yesterday was a combination of AI and humans.
Humans can tap the brakes. Once it breaks barriers, however, and the stock market is controlled by AI. There is nobody stepping in saying, wait. Wait. Wait. This is panic selling. Don’t.
That’s why it dropped, what was it, 500 points in just a couple of minutes. The government is also borrowing more money than ever. Retirement funds are in crisis. You couple these conditions with the volatility in Europe, and add on the immigration issue over in Europe and here.
And the world seems to be on the verge of a massive reset. However, I don’t think this is it. Not yet.
I believe this is just a correction. But here’s the super good news for you: I’m always wrong on timing.