We’ve reached the “horror movie” phase of the stock market.<\/p>\n
In just about every horror movie there’s some version of the following scene…<\/p>\n
The babysitter has put the kids to bed, and now she’s nestled, comfortably, on the sofa in front of the TV. Maybe she’s enjoying a bowl of popcorn and some wine.<\/p>\n
She hears a noise in the attic. But, she dismisses it.<\/p>\n
The noise persists. And, the babysitter decides to investigate.<\/p>\n
As she climbs the stairs to the dark attic, the haunting background music grows louder. There’s some rustling from behind a stack of boxes. The babysitter moves closer.<\/p>\n
A cat jumps out from behind the boxes and runs downstairs, out of the attic.<\/p>\n
The stunned babysitter clutches her chest, and then laughs while breathing a sigh of relief. “There’s nothing to worry about, after all,” she thinks.<\/p>\n
She turns to go back downstairs. That’s when the slasher jumps out and chops the babysitter into little pieces.<\/p>\n
In mid-July, the S&P 500 was trading at an all-time high. Investors had put the kids to bed. They were nestled, comfortably, on the sofa in front of the TV – expecting a relaxing evening.<\/p>\n
Then, in early August, investors heard a noise coming from the attic. They sold stocks out of fear that something dangerous was lurking overhead.<\/p>\n
That’s when a cat jumped out from behind the boxes. “It’s just the yen carry trade blowing up,” the investors thought to themselves. “It’s nothing we need to worry about.”<\/p>\n
So they laughed, breathed a sigh of relief, and rallied stocks back towards all time highs.<\/p>\n
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