Odds in Favor of 'Pink Swan' Events
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( TheStreet) -- A "black swan" event -- a rare, unexpected event that has a major impact -- is most often referred to as something with negative consequences. The near-record low investor confidence readings and double-digit decline in the stock market during the third quarter reflect concern that the odds have sharply increased that a black swan event may take place.
It is easy to cite a few of them: a European financial crisis; a U.S. recession; a fiscal debacle in Washington. However, investors have just as sharply discounted the odds of a positive surprise, or "pink swan" event. Given the pessimistic tone of investors, the pink swan may have the bigger potential market impact.
Last week the U.S. economic data came in better than expected and progress was made on the European debt problem with Germany's ratification of the expansion of the European Financial Stability Facility. However, this provided little relief to investors as stocks were basically unchanged on the week and remained near the low end of the 1120 to 1220 range the S&P 500 Index has been stuck in for the past two months. While investors fret over black swans, there are a number of potential pink swan events that could take place and grab investors' attention in the weeks ahead:
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