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As the markets churn ever higher, the potential for a "Black Swan" type event becomes a...

As the markets churn ever higher, the potential for a "Black Swan" type event becomes a worrisome proposition, says CNBC's John Carney. He cites three possible catalysts: The first is too much risk. It took down the market in 2008, and could do so again. Next , rising household debt and a second housing bubble. Lastly, a faltering economy. The market's rebound has been predicated on unconventional stimulus policies from the Fed and faith in an economy that is progressing on the road to recovery. But anemic Q2 growth and weakening job numbers could easily derail that thesis, and with it the entire gravy train.
Comments (10)
  • No mention of sequestration? I would think that would carry some weight for a little while. Even so, you can't discount an entire thesis based on one quarter. Let's at least wait for some consistent numbers to back it up shall we?
    3 Apr 2013, 08:24 PM Reply Like
  • I don't think a stall in the economy would cause a Black Swan event. A major company in financial company could do that. However, one area I am watching now is Egypt, because food and fuel shortages, combined with difficulty in borrowing, may cause a great deal of turmoil over the next few months. A China housing bubble is another possibility, though I think China could engineer sort of a soft landing.
    3 Apr 2013, 08:28 PM Reply Like
  • We get one significant down day, after just hitting new highs, and the emotional fearmongers arrive, like the swallows at Capistrano.

     

    First, are "black swans" only a problem in up markets? People don't react with panic if markets aren't trending higher? If North Korea were to attack the South, we'd greet it with a yawn, if only market were not trending higher? I guess it's enough just to utter "black swan" to scare a few folks.

     

    Second, household debt has been in a historic contraction, by trillions of dollars. Housing has barely begun an ascent higher and home-ownership costs now remain below comparative rental cost, completely unlike anything seen in 2008.

     

    Lastly, "faltering economy?" Has this media maven been paying the slightest attention to the just-reported retail sales, auto sales and home sales? Is it enough to have one lower jobs report, after months of large gains, to set him trembling with anxiety?

     

    Apparently so.
    3 Apr 2013, 08:32 PM Reply Like
  • Well, it is CNBC and those types of statements make for good ratings. ;)
    3 Apr 2013, 08:36 PM Reply Like
  • If it wasn't for Fed $85 Billion a month S&P would still be at 900. If things are so good why do we need a 0% and $85 Billion POMO?
    3 Apr 2013, 08:57 PM Reply Like
  • While I don't generally pay much attention to CNBC commentators or macro news, this blurb caught my eye.

     

    How can a "black swan" event occur if it is being broadcast via mainstream media? Would not such an event need to fly low so it catches the mainstream unaware?

     

    If it's proclaimed / foretold or threatened via CNBC, it's not a black swan event.

     

    3 Apr 2013, 08:56 PM Reply Like
  • thank you, cnbc is panic rating war monger
    3 Apr 2013, 10:16 PM Reply Like
  • Black swans are unforeseen events, not the run of the mill events mentioned.
    3 Apr 2013, 08:57 PM Reply Like
  • I would be more concerned about the rise in margin stock buying since it looks to be approaching historical highs. The most borrowing tends to be done at tops.
    3 Apr 2013, 10:45 PM Reply Like
  • John Carney: isn't a black swan something unpredictable....
    4 Apr 2013, 04:30 AM Reply Like
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