This week, Marc Faber (aka Dr. Doom) stated on CNBC:
I don’t think the market is as overbought as it was in ’87, so I don’t expect a crash. But I think for the time being, the market has peaked out, and I think in the meantime, bonds, which are extremely oversold, could rebound.
No one has a crystal ball – and market dynamics do not work in predicable patterns. I do worry that the risk from Europe effecting the economy is not quantifiable. Looking at historical relationships, one would conclude that Europe would only be a headwind to the USA Wall Street economy (aka GDP) via lower exports, and would have little effect on Main Street. Export sector is a disproportionally small employer.
Yet, what is going on in Europe is a continuation of the unresolved global financial crisis where there is no historical precedent. Many economic forecasts use the market as a forward indicator, and though I believe this is a dangerous game to play (as the market has no vision to the effects of a European triggered financial crisis) – it seems the market has a better imperfect record of forecasting than economists.