By Pooky, this blog economics journalist
Stock market globally has tanked today, anywhere from 2% to 5%!
The same type of global-wide stock down movement, occurred before the global economic down-turn of the past few years. The current concern lies with the Euro-zone deterioration-as data points to persistent high unemployment in the US. Then the US and China relations has soured. On top of it all, in emerging economies that is driving global recovery-inflation and a bubble condition, all over the place, has also raised concern.
- In the midst of the global economic crisis a few years ago, the first glimpse of a recovery was the rebounding tech sector globally.
Tech stock a leading indicator?
- Since tech stocks are a very strong leading indicator, the tanking of Taiwan’s tech stock-where thousands of American tech companies calls home, bodes ill for the future.
Two out of three major zones in trouble?
- Apart from the Euro zone concern, obviously, the US economy continues to make a very slow progress towards a full recovery. As those two conditions impacts global trade. China and much of Asia is also heating up-arguably, beyond sustainable fundamentals.
Emerging market recovery running out of steam?
- Euro-zone economic stimulus has bought several economies on the verge of collapse because of debt. The lesson is that there is a limit to stimulus spending countries can do-and many emerging economies economist have been warning their government of over extension. Then a bubble scenario could be occurring in several emerging economies.
The globe turns protectionism?
- The overall picture, thus does not bode well for global trade-which many economist said was critical for a strong global recovery. The rationale is, trade is the driving engine of growth currently. The US meanwhile is getting tough on trade-as unemployment continues to be persistently high, with US president Obama saying he will push US exports while making trade fair.
Recent survey points to confidence?
- Yet underlying it all, is a major recent survey of global CEOs, that said they were positive about the future 3 years from now, with a little less about the current situation. The survey indicates some level of confidence. However, before the crisis during the past few years, many CEO also were positive and never saw the difficulties coming.
More than profit taking?
- Yet this blog want to point out, that many global class investors, such as Soros and others, have in fact expected a stock market sell off globally, in the first half of this year-namely because of massive up-ward movement of the stock market-that is just getting very ripe for a profit taking.
Our advice is not to panic. Remember “Fear is the Mind Killer.”