With the Dow closing down nearly 300 points, the Nasdaq off more than 90, and gold and silver bucking the trend by moving higher, today a 50-year market legend warned King World News we could see an acceleration of selling and disorder.
Eric King: “It’s been a terrible day on Wall Street, Art. What is happening as you see it?”
Cashin: “It’s like a poisoned stew. What we’ve seen is earnings from several of the multi-nationals adversely impacted by the strength in the dollar. This has caused them to give forward-looking guidance that wasn’t as hopeful as it was just weeks ago.
Greece, which received a pass yesterday, saw the new leadership being as aggressive as they had during the campaign. That put the Greek banks under pressure, with some of them plunging more than 10 percent.
Then the Durable Goods release in the United States was absolutely dreadful. This has people rethinking where the economy is going and where the Fed is going. So that general kind of nervousness pulled the legs out from under the market.
The markets tried to gain back half of today’s losses but weren’t able to sustain that, so we see the Dow down nearly 300 points. People need to keep their eye on the dollar and oil.”
Eric King: “What could cause the selling to really accelerate at this point, Art?”
Cashin: “If the currency war changes from a kind of cerebral chess match into an all-out donnybrook (disorder). That could happen. Last night we had some absolutely strange whipsaw trading in the Swiss franc. We’ve seen two cuts from Denmark.
So there are a lot of surprises coming from the central banks around what’s happening in currencies. Everybody is trying to weaken their currency and that is going to be a heavy burden on the Fed because if they begin or hint that they are near tightening, that will make the U.S. dollar even stronger and hurt U.S. businesses (even more).”
Eric King: “There have been rumblings about possible defaults from countries that could put serious pressure on the European banking system.”
Cashin: “There is that risk that things could spill over. The problem of contagion continues. And it’s not just Russia. We will have to wait to see what happens with Venezuela and elsewhere.”
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