Finance

Stock Market Crumbles, Along With The Rest Of Society

Things are going badly in the stock market, and everywhere else.

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It was a rough weekend. There’s nowhere you can go anymore in America without having to wonder if you, or your girlfriend, or your kid, will leave with a bullet hole. These shootings happen again, and again, and again, and not only are our leaders failing to do anything to protect us, they’re the source of our cultural rot. People are dying.

And yet, I guess we all just have to go back to work and talk about things like stock prices while those of us who don’t think American streets should be warzones keep fighting for something better, and while everyone else repeats NRA talking points and ignores all the mountains of evidence about how other countries solved their mass shooting problems. That’s apparently where we are in 2019 America. I guess we just have to keep going on about our days like homegrown Nazis aren’t gunning down our friends, neighbors, brothers, and sisters.

On that note, I’ve got more bad news to report. On Monday, the Dow Jones Industrial Average suffered its sixth-largest drop ever, cratering by 767 points. In less than a week, the battered S&P 500 fell by more than five percent. Over just four trading days, $1.4 trillion in shareholder wealth was erased from retirement accounts, 529 college savings plans, and all the other types of portfolios with holdings in S&P 500 companies.

The market carnage started following the interest rate cut from the Fed a few days ago. Normally interest rate cuts are good news for stockholders, but this time, the first rate cut in over a decade had the opposite effect. Traders attributed the drop in stock prices to the description of the rate cut as a “midcycle adjustment,” in the words of Federal Reserve Chair Jerome Powell, verbiage that implied this cut might not be followed by many others.

Then, on Monday, the sixth straight day of losses in the stock market, major stock indexes shed at least a further three percent in response to the drop in China’s yuan currency. China was seen as allowing the drop in its currency in retaliation against Trump’s latest threat to impose more new tariffs on Chinese imports (a weaker yuan makes Chinese exports cheaper to purchase with foreign currencies). China itself blamed the drop in the yuan on “trade protectionism measures” and tariff increases.

Later on Monday, U.S. Treasury Department Secretary and Spokeshamster Steven Mnuchin said that the U.S. would be officially labeling China a currency manipulator, the first time this has happened since 1994. The “currency manipulator” label could lead to further chaos in the financial markets. For what it’s worth, just three weeks ago, the International Monetary Fund said that the value of the Chinese yuan was in line with China’s economic fundamentals, but found that the U.S. dollar was overvalued by six to 12 percent.

By midday Tuesday, stocks had rebounded a little, after China moved to fix the yuan at a slightly stronger rate. China’s commerce ministry also announced overnight that Chinese companies had stopped buying U.S. agricultural products in retaliation against Trump’s latest tariff threat.

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So, there you have it. Things are going badly in the stock market, and everywhere else. If you have any energy leftover to worry about your finances when you’re done worrying about whether you’ll be sprayed with bullets, well, you’ve got me beat. Good luck out there.

Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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