The Dow Jones Industrial Average topped 13,200 as May began. Since then, it’s been pretty much all down hill. As I write, the DJIA is off another 1.34 percent to 12,338. Whatever the reality, many people still look at the average as a measure of the economy’s health. And while you know I am wary of any simple explanation of most market moves, it’s clear that the “greed and risk” mentality of a month ago has been replaced by “fear.”
There’s plenty about which to be unsettled: The eurozone crisis, the huge gambling loss at the one big American bank that was supposed to be well-run and Facebook’s botched initial public offering (although, according to the Wall Street Journal, Morgan Stanley and other underwriters have made a profit of $100 million).
The big enchilada is concern about America’s slow recovery slowing even further, along with political paralysis in D.C. Washington actually lost 300 jobs last month, hardly a promising sign if the trend continues into the summer. Unemployment remains at unacceptable, economy-wrecking levels. Then there’s China, facing its own slowing economy and a political succession crisis with the downfall of Bo Xilai. Interestingly, fear of an imminent Israeli strike on Iran has faded. And some signs point to housing at least hitting bottom, really, this year.
No matter. Oil has fallen to $90, a new low for 2012. What’s not to like? That price fall is a sign that the commodities market expects slower growth. Maybe it’s just a May pause. But investors — and the worker bees along for the ride with their 401(k)s — have genuine cause to fret.
And Don’t Miss: The housing bull vs. bear debate || Zero Hedge
Today’s Econ Haiku:
Greek euro exit
Thinking the unthinkable