Markets & Economy

Worried about plunge in stock prices? Don’t just do something, sit there

Stock market sell-off was overdue, and bond rally is knocking rates down

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Three weeks ago, surprise market movements embarrassed New Year's prognosticators. By last week the moves were big enough to attract a few bottom-fishers, others too queasy. At the end of this week, the defensive huffing "Just a correction" sounds like Monty Python's amputated knight, "Just a flesh wound!" First some hard data, then the mechanics and risks of a currency crisis, then the Fed and U.S. response. Fourth-quarter GDP did fine, up 3.2 percent, which beats the hell out of 2 percent. But that was a percentage-point lower than the boomer forecasts last month. Best part: Consumers led, accounting for the whole gain. But housing is thin at best, pending sales in a bad tank in December. And orders for durable goods sank 4.3 percent in that month. The questions remain: Have we entered true acceleration, and if so enough to raise wages? We can argue about those questions, but there is nothing in the data to cause the stock market sell-off and bond rally. Those have ...