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Why did markets fall so hard last week?<\/p>\n
Most folks assumed that it had something to do with fears of a Eurolehman, but it also seems possible that the market is reacting to what it normally reacts to: expectations of a slowing economy.<\/p>\n
This was the essence of Richard Russell’s big “sell everything” call<\/a>, that the market was telling him that a bad economy was around the corner.<\/p>\n Credit expert David Goldman at Asia Times<\/a> is thinking along the same lines, that the weakening US economy is the next shoe to drop.<\/p>\n And the bad news is already coming:<\/p>\n 1) Unemployment claims rose to 471,000 vs expectations of 439,000 in the week ended May 15;<\/p>\n 2) One in seven American mortgages is behind in payments;<\/p>\n 3) Foreclosures reached a record as the banks work through their backlog;<\/p>\n 4) Mortgage applications last week fell to the lowest level since the survey was conducted;<\/p>\n 5) Commercial real estate prices continue to fall.<\/p>\n Along these lines, this week we get Case-Shiller and the first revision to Q1 GDP, so, this idea might have more to go on very soon.<\/p>\n Don’t miss: The 13 housing markets that will never recover ><\/a><\/strong><\/p>\n