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The talks of unwinding of yen carry trade and hedge fund positions, etc, plus concerns over US economic growth, made Dow plunged over 200 points at one time this morning, a typical change of market’s sentiment from hyper optimistic to hyper pessimistic . The US economy is actually doing ok, judged by this morning’s numbers:
Growth: After three sub-50 readings in four month, the ISM index in February rising to 52.3, from a January read of 49.3% which was the lowest since April 2003.
Inflation: The monthly inflation numbers picked up in January, but it is not cause for alarm. The core PCE deflator was up 0.3%. That was the same as the core CPI as already reported. It followed two straight 0.1% gains, however, and does not in itself represent a trend.
In the next few days, the market may stabilize as people realize that “soft landing” is still in cards.
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