Black Monday?

The Dow Jones Industrial Average fell by 1175 points today. This is the worst drop in the stock market's history in raw numeric terms, but it's nowhere close to the market's worst day. On the original Black Monday in 1929, the market lost nearly 13% of its value, while it lost only 4.6% today. The drop is blamed on that old bugaboo, "uncertainty," as the arrival of a new Federal Reserve chairman during a continued decline in unemployment raises the possibility of increased interest rates. While this may look like too big a drop to blame on mere uncertainty, the time may have come for a correction after a surge in the Index during President Trump's first year in office. On the other hand, the timing of a decline that began last week may start looking suspicious to the President's most rabid or credulous supporters. From their perspective, the sell-off may appear too precisely timed to discredit Trump's boasting of economic growth during his annual message to Congress. I can imagine some of them imagining that hostile market players (e.g. Warren Buffett? George Soros?) would want to undermine a Trump boom simply to spite Trump or aid his domestic enemies going into the midterms. We won't have to worry about this if the market rights itself, as it should if uncertainty alone is to blame for today's losses. If the past week signals the return of a bear market, however, politics could get uglier than ever very soon. If Trump himself seems to think it borderline treasonous for Democrats not to join in the stormy applause for his annual message, imagine how his fans will react should anyone seriously suggest that political enemies have sabotaged the economy. The reaction wouldn't be "fascist." It would be downright Stalinist.