The media were all over the massive earthquake in Haiti this morning, discussing not only the human tragedy but also how such events occur. While certainly not the same as a devastating earthquake, I think there will be a market quake sometime this year.
They said that two of the Earth’s plates were moving past each other, right under Haiti, and the pressures got too great for friction to hold them back any longer. The plates ran past each other at fast speeds, relieving the pressure and restoring equilibrium until the next time.
Sound like the battle between the forces of bulls and bears? The bulls say the economy is recovering the bears say the recovery is a fake. The technicals say the trend is still up and that is the friction holding the two opposing market “plates” (bulls and bears) in check. But when the technicals finally turn around I see a major jolt coming.
New lows under last year or not, however far down it goes will be brutal. Inflation is coming (ask the long end of the bond market). When the stock market realizes it, hiding in your bathtub under a mattress won’t help.
May the people of Haiti recover quickly.
