The U.S. Is Short on Options to Confront Next Crisis

Bloomberg, 26th Aug 2015 by Kasia Klimasinska and Jeanna Smialek

Stock market and commodity price declines are sweeping the globe, raising a question: If the U.S. economy lands in another hole, what tools does it have to dig itself out? 

Perhaps not many, or at least not as many as before the 2008 meltdown. 

U.S. debt stands at 74 percent of gross domestic product, compared with 35 percent in 2007, based on a Congressional Budget Office report released Tuesday. That burden is expected to grow further in coming years, limiting government options for additional fiscal stimulus in the form of spending or lower taxes.

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Here's What Usually Happens to Markets After the S&P 500 Drops 5 Percent in a Week

Bloomberg, 24th September 2015 by Julie Verhage

Let's look at history

Last week was a brutal one for the Standard & Poor's 500 index, with stocks tumbling more than 5 percent for the first time since 2011. The bloodbath is continuing today. 

As Bespoke Investment Group points out, a weekly drop of more than 5 percent has only happened 28 other times since 1980. If you're trying to decide what to do this week, maybe Bespoke's chart will help. It gives you a look at what happened in the S&P 500 in the weeks following a 5 percent decline. On average, the market is relatively flat the next week, up 1.65 percent over the next four weeks, and up close to 5 percent over the next 12 weeks. Also important to note is that 60 percent of the time, the index moves higher the following week. 

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