What is the correct level of fall in the stock market if the US president declares economic war on the rest of the world even at the risk of causing a recession in his own country? Does 10% capture it? Or 12%, which was roughly the S&P 500 index’s three-day decline by the time the London market closed on Monday? Or 15%? How about 20%? More? A lot more?
During three straight days of heavy falls in the share prices everywhere, a striking feature has been the absence of wise old market heads popping up to argue that the panic is perhaps a little overdone and fair value is emerging. Instead, the collective mood is stuck in bewildered mode for understandable reasons.
