Via WSJ’s Live Blog, Jason Goepfert of Sundial Capital Research writes in with this unhappy note:
“There’s still an hour of trading to go before the close of regular trading hours, but in the interim we’re seeing several breadth- and price-based indications that today is, in effect, a market crash.
“By that, I mean that the level of selling pressure is so great that we’ve witnessed something similar only a handful of times, and they were what most consider to be crashes or at least mini-crashes.
“First, breadth on the NYSE is skewed to the downside to a historic degree (fewer than 2% of stocks are positive on the day). Only 5/13/40 and 5/21/40 had fewer up stocks as a percentage of total stocks than today does. Yes, it’s been 70 years since it has been this bad.”
The dates mentioned are interesting. What was going on in U.S. and the world on May 13th and 21st, 1940, to explain two such disastrous stock market days?
What was going on was World War II. May 10th, 1940 was the day Nazi Germany invaded France and the Low Countries, Chamberlain resigned, and Churchill became Prime Minister. As I suspected as soon as I noticed the three days difference between these events and the stock-market slide in New York on the 13th, there was a weekend in between. May 10th was a Friday, so the 13th was the first full trading day after the ‘Phony War’ turned into a very real hot war, with the German Blitzkrieg making rapid progress through the Low Countries. The 13th was also the day the Germans broke through the French defenses around Sedan, though that was probably not known to the stock-trading public. Churchill’s “blood, toil, tears, and sweat” speech was also on the 13th.
The only New York Times front page I have been able to find for the period is from the 15th. The headlines are:
DUTCH END RESISTANCE EXCEPT IN ZEELAND
NAZIS TAKE SEDAN, STRIKE AT FRONT LINE;
SUFFER HEAVY LOSSES IN FURIOUS ATTACK
It looks as if newspapers were a couple of days behind events on the ground, and spinning things for the Allies as best they could.
By Tuesday, the 21st, the second stock-market disaster day, Queen Wilhelmina had fled to England (on the 13th), Rotterdam had been destroyed by German bombers (the 14th), the Dutch had surrendered (the 17th), and German tanks had reached the Channel (the 20th), cutting off the British Expeditionary Force, the French 1st Army, and what was left of the Belgian Army from the main body of the French Army. Again, I do not know whether the splitting of the Allied lines was known to newspaper readers in America by the close of the trading day on the 21st, but everyone must have known by then that the Allies were losing, and losing badly, after only a week and a half of full-scale hostilities. (I imagine the French and British stock markets – not to mention the Dutch and Belgian – were dropping even farther and faster than the NYSE, but that’s irrelevant here.)
What can we conclude? When it comes to wrecking the NYSE, Obama’s administration and its enablers (of both parties) in Congress have arguably been more destructive than anything since the darkest days of World War II. If Chipper’s source is right, Obama’s debt downgrade has been worse for the economy than Pearl Harbor. Heck of a job, Barry! Time to take a hint from Neville Chamberlain and resign? Not that Joe Biden has any resemblance to Winston Churchill . . . . We’re screwed.