Black Monday, the 2020 edition

Well, it was not quite Black Monday, Oct. 19, 1987 – but I see there is already a Wikipedia entry for today.

What happened? Well, a Russian–Saudi Arabian oil price war erupted over the weekend. The Saudis are planning to ramp up oil production, so that low crude prices put the Russians and the North American shale producers out of business. This situation has actually been years in the making.

So together with the instability brought on by the coronavirus crisis, that was too much. The S&P 500 was down by 7% almost immediately after the markets opened in New York. So the circuit breakers kicked in to halt trading for 15 minutes. The idea is to let traders step back and ‘take a breath’. With all the high-frequency & automated trading happening today, who knows if this is any help at all, though. (At the end of the day the S&P was down by more than 7%). 

CNBC’s Bob Pisani and Wilfred Frost at the close of the trading session on the floor of the New York Stock Exchange today. The Dow ended down 7.8%, and the S&P 500 ended down 7.6%. Late on Monday, the Trump Administration floated payroll tax cuts to try to bolster the markets, but there is very likely more pain ahead for investors. Watching the coverage of the markets had a little bit of a post-9/11, and a ‘2008 global financial crisis’ feel to it. It is now likely that Germany, Italy, Japan, South Korea will slip into a recession this year, with the United States not too far behind if this continues for too long.

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