Tanks in the Streets are rolling
The Baht is Falling!
Alright, I'm not much of a poet and Haiku really doesn't work in English anyway, but this story about the market today from AP is absurd:
Stocks dropped suddenly Tuesday after Thailand's military launched a coup against the country's prime minister. Traders watching Thailand closely are certain to remember how trouble in the kingdom had worldwide implications in the past: The Asia currency crisis that erupted in 1997 began with the devaluation of the Thai baht, then snowballed into a currency crisis in emerging markets around the world.
I guess since the "Asian" crisis back in '97 started with the Thai Baht coming unglued, the AP thinks that US stocks will now react to every wiggle of an Asian currency. Of course, conditions then were much different than now, but economic research is not exactly the AP's strong suit. I suppose this could turn into something bigger, but I don't think traders decided to sell today because the Thai military (why does Thailand even have a military?) decided to kick the PM out while he was visiting the UN. This has been so widely rumored that even I had heard about it and I don't usually waste my time on Thai politics - Thai food yes, Thai politics no.
I think a more likely explanation for today's minor pullback is that we've had a nice run and some found this morning's housing numbers a good reason to take some profits. Housing starts and permits were both less than expected this morning as was PPI (wholesale inflation). I didn't find anything surprising about either stat and the market shouldn't have either. We still stand by our often stated view that housing will continue to slow, but won't push the US into recession. With interest rates falling again today -- more than we think is warranted by the way -- we suspect housing will find a bottom in the next couple of quarters.