As if to illustrate our post this morning, and to illustrate just how jittery the market is, and to painfully illustrate just how dangerous the situation in Japan is still, the news late this morning out of Europe, regarding the nuclear crisis in Japan, drove every asset into an immediate nosedive (or in the case of the safe havens, a sharp spike higher.)
The latest news roiling the markets is about Japan, but it isn’t actually coming from Japan. Rather, the EU’s commissioner for energy, Guenther Oettinger, told a European Parliament committee “the site is effectively out of control.” This reiterated the same comments reported in two UK papers, the Telegraph and Daily Mail.
Look at the pictures in the Mail’s story; I have a more comprehensive grasp of just how bad the damage is after seeing them. They are sobering. There have been reports that those 50 people who’ve been — heroically — trying to save the plant had to be evacuated temporarily, and you wonder how long they can stay there.
The Dow dropped as much as 190 points in a matter of minutes. It bounced back to about down just 100, and is currently down around 170. All this underscores the fact that the market is a rough place to be right now, especially if you’ve been hooked by the Street’s usual sunny pronouncements.
I bring this up for one thing to keep you appraised of the latest developments, but also to warn you against getting caught up in the extremely violent trading going on right now. It cannot be stressed strongly enough, the crisis in Japan is extremely fluid, and while we pray for the best, only a true fool would not shield themselves from the worst.
Yes, the truly brave investor is heading into this storm, not away from it, taking to heart Baron Rothschild’s old advice. That’s essentially what Barton Biggs was doing with his Japan call. But it takes a very, very steady hand to play that game.
“Nothing is going to be unaffected, doesn’t matter if you’re an oil producer or a country like Czech Republic that’s supposedly a safe haven economy,” Koon Chow, a forex strategist at Barclay’s, says.
Even beyond that reality, the U.S. stock market has been poised for a sell-off. Even with the Fed being as “accomodative” as it’s ever been, it can’t only cajole people into buying. It can’t force them to buy. A sell-off’s been building, and we pointed out two weeks ago that the insiders have been bailing. If you’re watching this market the past week-plus, even before Japan’s calamity, you could practically see the speculative money leaving the roost. The rest of the crowd is now following.