In Stanley Kramer’s hit ensemble comedy “It’s A Mad, Mad, Mad, Mad World,” a troupe of early 1960’s mid-level comedy stars are sent racing across the Mojave Desert after learning of buried treasure from a dying roadside accident victim. That victim, played by Jimmy Durante, told the assembled group that a fortune lay buried beneath a “big W” on a San Diego beach just before he literally kicked the bucket. The ensuing scramble to be the first to locate the treasure provided the plot vehicle that permitted the director to wreck airplanes, service stations and cars aplenty in an epic comedic genre that later spawned movies like “1941” and “The Blues Brothers.”
Unfortunately, investors haven’t found many laughs in recent weeks as fears of an epic economic slowdown have sent the market into a tailspin as hair-raising as the flight piloted by Buddy Hackett and Mickey Rooney in Kramer’s film. Hopes for a sharp “V”-shaped recovery are appearing to have been overly optimistic and the possibility of a dreaded “double-dip” or “W”-shaped recovery is weighing upon trader’s minds this week. Fears of contagion in the Eurozone have been heightened by the release of a sobering new ECB assessment of the exposure held by banks and sovereign states on the continent and news that Chinese economic activity is slowing has sent overseas markets lower. Anxious investors will be closely monitoring the ISM manufacturing release at 10 a.m. Monday morning to see if China’s slowdown is matched by a reduction in the pace of U.S. Economic activity. A failure to meet expectations could cause the bull market itself to kick the bucket, turning what had been a moderate correction into a full-blown bear market.
The climactic scene of the movie featured its extensive cast clinging desperately to the top of a wildly swinging fire engine ladder before being flung off to ignominious landings. Recent efforts by European economic officials to contain the Euro crisis have bordered on the farcical at times and a humiliating but safe landing for the EU is about the best we can hope for. In the movie, a recurrent scene featured Dick Shawn as Sylvester, the devoted but clearly unbalanced son of Ethel Merman’s character. After receiving a call from his distressed mother, Sylvester shouted “I’m comin’ Mamma!” and raced off to save his mother. Unfortunately for investors, the likelihood of a “Big W” is increasing by the day and it doesn’t appear that anyone will be driving to rescue the market anytime soon.
The sense that the global economy is at risk is contributing to unease that is responsible for much of the market’s May decline and there is a strong possibility that weakness will persist into summer if the numerous threats to the global economy are not soon reduced. Testy traders, weary of hearing of PIIGS, unplugged Gulf oil leaks, Iranian nukes, Korean torpedoes and frustrated by ineffective actions on the part of a group of clearly divided European bankers, can be forgiven for concluding that “It’s A Mad, Mad, Mad, Mad World.” Let’s hope the global community comes to its senses before we stumble onto a real-life “Big W” of epic proportions.
Bernie McSherry is senior vice president for strategic initiatives at Cuttone & Company.