Between May and October global markets had diverged, with most headed down as the US markets headed up. This is certainly not the first time this has happened. Then as now, the US market dropped to meet up with the rest of the world’s market. And main stream media has all the excuses; a China slowdown, Italy spending and tax cutting in opposition to the EU, Saudi Arabia crimes against a journalist and, of course, Fed Chair Powell raising interest rates. All of this supposedly pushed US stocks into correction territory. But what is the real underlying threat? The real threat is to the bond market and its interconnected linkages.
The real threat to the stock market is the debt market and the real threat of the all of the above issues is an explosion of debt that is too big to bail.