Wall St stocks and oil have slumped again amidst growing talk of recession risk for both the US and the world.
In Friday trading (Saturday NZT), the Dow Jones fell 1.3 per cent, the Standard & Poor's 500 1.9 per cent and the Nasdaq 3.3 per cent.
That took losses for the week to 3.1 per cent for the S&P 500 and 5.4 per cent for the Nasdaq.
In a world braced for a hard landing in China, the US recovery was meant to be coming to the rescue.
But Wall St's dismal start to the year has sparked fears that it may have stalled and that the US Federal Reserve may have moved too soon to raise rates.
Tech stocks were hit particularly hard as professional networking site LinkedIn delivered a disappointing result and warned of a weak outlook. It shares plunged US$83.90, or 44 per cent, to US$108.38, the worst single-day performance in the company's history.
The Nasdaq is now down more than 16 per cent from its highest point in the last 12 months - not far from Bear territory.
Is this the start of Techwreck 2.0?
US media haven't been slow to highlight the risk that the latest dot.com bubble may have burst.
USA Today noted that the 462 tech stocks listed in the US have lost a total of US$529 billion in value this year.
Meanwhile, fresh falls in oil and growing concerns about China's ability to slow its capital outflow and rebalance the economy have commentators picking increasing odds of a global recession.
New figures show China's foreign exchange reserves dropped by US$99.5 billion in January to US$3.23 trillion.
Chinese officials are trying to maintain a policy of liberalising the currency but are battling capital flight, which is putting downward pressure on the yuan. The Chinese currency hit a five-year low last month.
Recession or not, optimism about the strength of the US recovery is fading.
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As the yuan falls it will put further deflationary pressure on the global economy, which is already struggling to process the slump in oil prices and other commodities - including dairy.
In New Zealand, the extended period of low dairy prices is the biggest concern. Last week, Fonterra cut its farmer payout forecast to $4.15 from $4.60 per kilo of milk solids. The next day, prices in the global dairy trade auction fell another 7.4 per cent.
ANZ economists responded by cutting their forecast for the payout to $3.95.
The average breakeven for most farmers is estimated at $5.40 per kg.
The Reserve Bank has indicated that it is likely to cut rates further this year if international conditions continue to weaken.
At this point that looks more likely than not.
A Financial Times survey of 51 economists last week put the risk of a US recession at 20 per cent.
Recession or not, optimism about the strength of the US recovery is fading and with it the odds on the US Federal Reserve raising rates again anytime soon.
That may put renewed upward pressure on the New Zealand dollar, something which exporters can't afford right now, and force the Reserve Bank's hand.