Friday is historically the most volatile day of the week in markets. That's because traders (as opposed to investors) would rather invest in cash over the weekend, if there is any fear on the street. There was fear on the street.
In addition, the stock market has gotten too far ahead of the economy. Then, throw in a major international crisis, and it is an ugly way to start the weekend! The Dow lost 166 points today . . . ouch!
Kinda reminds you of the Greek bond crisis last year? This too will pass!
But, make no mistake, this is a bigger deal. While the fall of the America-friendly government in Egypt is probably good for the Egyptians, it is bad for the markets for two reasons. Geo-politically, it further unsettles an already unsettled part of the world that just happens to produce most of the world's oil. Close to two million barrels of oil pass thru the Suez Canal everyday.
Secondly, it increases uncertainty, and stock markets just hate uncertainty! It's as simple as that.
The stock market needs a rest . . . after such a long bull run, it deserves a rest.
Did I mention this too will pass?
