Markets & Economy

Europe’s predicament puts Fed in a pickle

Central bank could face dead stick landing if it tightens

Wow. What was that all about? The S&P 500's wild ride. Source: For one thing, not the U.S. economy. Another thing not about: mortgage rates, just about back where they were before the stock market circus. Take it one piece at a time. ... Pay as little attention as possible to the stock market. It enjoyed a one-way rally for three years, and was way overdue for waves of profit-taking -- for any reason or no reason at all. But two fundamentals remain unchanged: If you sell your stocks, there is nothing useful to do with the money, just safety plays with little or no yield; and second, business conditions and earnings are still good, especially in the U.S. With those two forces in place, it’s hard to get a deep unwind underway. To harm the real economy, stocks have to crash. The real economy may not be accelerating, but it is not slowing in any meaningful way. U.S. manufacturing is very strong, aided by energy costs as little as one-third those...