Buffett’s Butterfly Turns Into Terror Over Tokyo
So did US employment data, the Fed’s delays on rates cuts, and a flock of evidence that makes investors see recession.
Mothra says hello.
Photographer: Hulton Archive/Getty Images
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Tokyo markets have opened the week with great drama — and it’s best to think of it as chaos theory at work. A butterfly flapping its wings in Wall Street (with some help from Warren Buffett, the Federal Reserve, and innumerable retail investors) has created a Tokyo typhoon (or morphed into a giant, markets-destroying Mothra, if you’re a fan of Japanese monster classics). To explain why, we must start with the expectations embedded before prices started to churn. The July survey of global fund managers produced by Bank of America Corp. showed high confidence in a soft landing for the global economy (expected by 68%). The chance of a hard landing was put at only 11%, although this did represent a rise from earlier in the year: