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\\nThe Catalyst is Rising Interest Rates
\\nOctober is just one week old and the carnage on Wall Street has already begun. I wonder if the October complacency is beginning to be shaken with the down move that we see.\\xa0 Now, the Dow Jones is not down very much; in fact, it barely fell on the week; but the S&P was down about 1%.\\xa0 But the NASDAQ was down more than 3% on the week. The catalyst is rising interest rates, which of course, the markets have been ignoring up until Wednesday afternoon, when all of a sudden somebody started to worry about the markets.
\\nA Weak Thursday and Friday Led to 1987 Black Monday
\\nThe big declines happened on Thursday and then again today. The declines are not really big; not by the standards of an October crash, but we still have several weeks left for a big down move in October.\\xa0 We had a weak Friday, a weak Thursday - that\'s exactly what we had in October of 1987, which led to Black Monday.
\\nEconomy Far More Vulnerable to a Rate Shock
\\nRemember, the backdrop there was rising interest rates. We have interest rates rising now, of course they\'re not nearly as high as they were back then.\\xa0 But percentage-wise, this is probably even higher, given where we\'re starting from. Of course, the economy is much more highly leveraged now than it was in 1987 and it\'s actually far more vulnerable to a rate shock now, than it was then.\\xa0 Of course, back then, people were worried about rising trade deficits - they\'re even bigger now than they were back then.
\\nInvestors Not Smart Enough to Worry About Trade
\\nIn fact, we got the trade deficit out today for August. Another jump following the jump we had in July.\\xa0 I think it was the biggest increase in 6 months.\\xa0 Imports are rising, exports are falling.\\xa0 It\'s bad news on trade. People were worried about trade back in 1987.\\xa0 They\'re not smart enough to worry about it now, but they should.\\xa0 The trade deficit is probably more important today than it was back then.\\n\\nOur Sponsors:\\n* Check out Rosetta Stone and use my code TODAY for a great deal: https://www.rosettastone.com/ \\n\\nPrivacy & Opt-Out: https://redcircle.com/privacy'