Nobody knows why stocks are tanking

The fact that markets were so unprepared for an inflation scare helps explain why they’re freaking out about it so much now—but only helps. The truth is that we don’t really know why stocks are selling off so much. Sure, they started dropping last Friday because interest rates were rising—that was the fear of higher wages—but since then they’ve continued to do so even as interest rates have too. It’s not just that there’s no coherent story there. It’s that there’s none at all. It’s reduced people to saying that maybe this is about automated traders selling in response to all this volatility, or valuations just coming back down to earth after they got ahead of themselves at the start of the year. And maybe it is! But these are just sophisticated ways of saying you don’t know. Which is part of this. People seem to be panicking because they don’t know why they’re panicking.

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Now, at some point, prices will have fallen enough for people to realize that the economy is still doing well, businesses are still hiring, and consumers are still spending. Good news will eventually be good news again.

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