The New York Stock Exchange endured a harsh start to 2016 with stocks plunging in value at every turn. According to analysts, it may be an indicator that a US economic slump is just around the corner.
Manhattan Venture partners Chief Economist Max Wolff said the stock drop could mean anything.
“The economy doesn’t look as bad as the stock market right now, but that’s a flip side of the fact that the stock market has looked a whole lot better than the economy for about six years,” Wolff said.
“We do think the market got out well ahead of the fundamentals, and now they’re violently re-correcting back closer to where they should be.”
According to BK Asset Management’s Boris Schlossberg:
“We don’t have a 2008 scenario, but we definitely have a very serious slowdown in front of us, and I think the market is looking at that and doesn’t like it at all.”
Howard Marks of Oaktree Capital Management said:
“It seems clear to me: The market does not have above-average insight, but it often is above average in emotionality. Thus we shouldn’t follow its dictates,” Marks wrote.
“In fact,” he added, “contrarianism is built on the premise that we generally should do the opposite of what the crowd is doing, especially at extremes, and I prefer it.”
According to South Korean, US, Chinese and European agencies, seismic activity close to North Korea’s nuclear testing site is consistent with its fourth nuclear test.
The US Geological Service said the 5.1 magnitude quake on Wednesday in Punggye-ri may have been caused by the north’s nuclear tests announced previously. The South Korean Meteorological Administration said they suspect a “man-made” earthquake. The Administration is currently analysing the epicentre of the quake.
Meanwhile, North Korea state radio said the North Korean government is to make “an important announcement” following the artificial earthquake.
The European Mediterranean Seismological Centre said it detected unusual seismic activity in North Korea but couldn’t verify if North Korea had conducted a fourth nuclear test.
The Chinese Earthquake centre said it detected a possible explosion in North Korea at “zero kilometres with a magnitude 4.9 quake”.
The last North Korean nuclear test was in 2013. China, a close ally of North Korea, had increasingly grown strained of their relationship due to North Korea’s persistence in improving its nuclear armament. It had condemned the 2013 nuclear test.
Many suspect the explosion to be nuclear in nature as the 2013 nuclear test had a 5.1 magnitude quake, synonymous with 2016’s quake in the same location.