The economy slowdown fear

The global stock market fell sharply due to the disappointing data from Germany's manufacturing sector. However, many economists and institutions viewed the Friday's selloff as a market overreaction. At the Credit Suisse Asian Investment Conference in Hong Kong, the former chairwoman of the Federal Reserve, Janet Yellen, said "I don't see a US recession as particularly likely". In addition, the financial institutions generally believe that weakness among German industry is "manageable".

The risk currently facing the world economy does exist and also always exists. We cannot make any particular prediction about "blackswan risk" (otherwise, it is not "blackswan risk"); the sources of risk are known to the market (maybe not all individuals know), and the market performance should reflect all the information available to the market under the perfect circumstance. However, as we know, the market can overreaction, then the market does not reflect the information perfectly and people can draw wrong conclusions from the overreacting market performance, accumulate the overreaction in the market.

The known risk is from the changing in the world trading, the economic shocks within the world economy and others. However, no one knows when the next recession will come and what the next recession will cause. Like now, maybe many well known experts are saying the market is overreacting to the negative news; however, once the entire market overreact to some extent, the fear will come true.