The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Just Another Correction

10/25/2018

This is the worst month for the stock market since January of 2016.  But, they are very different corrections.  I was nervous during the first one but am just annoyed at the current one.

Glencore is a huge London-based commodities trader, and they were struggling two and a half years ago.  Because they were the fifth largest user of derivatives in the world, I recognized they posed a big counter-party risk.  Fortunately, they quickly sold off a number of assets in time to shore-up their balance sheet.  In other words, there was a systemic risk then, that I don’t see today.

My intellectual hero at Wharton is Dr. Jeremy Siegel, who predicts “muted and volatile equity returns through year-end.”  I am slightly more optimistic than him, as the market tends to rise after the mid-term election, because uncertainty goes down.  Virtually nobody foresees a market crash.

However, I do worry that the timing of the  Mueller report release will hit the market when it is already nervous.

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