There’s no truer reflection of the world we live in than the market’s action today. It reflects the globalization of our markets, the emergence of China as the economic engine of the world and the fear of an economic slowdown that is stalking this market.
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Flag of the People's Republic of China
Let’s recount the day’s events: Investors in China begin selling shares based on the results of a survey of their country’s economic prospects that is compiled by a U.S. based researcher.
That selling and concerns about slowing growth in China as a result of this survey—which only began being compiled last May—hit Europe and then follow through to the U.S., where equity prices decline by roughly 2.5 percent and bond yields crumble in the face of relentless buying of the two and ten year U.S. Treasury notes.
Is this really the world that investors are destined to inhabit? One where a previously obscure survey of economic growth in China has implications for asset prices around the globe? At this point, it is. And that’s because of a global aversion to risk that is focused on the fear of a significant slow down in economic activity.
I wrote about this a couple of weeks agoand with every data point that confirms the view things are slowing, whether it be in China or the U.S., investors seem likely to keep hitting the sell button.
Related Links:
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
