The S&P 500 index dropped more than 2 per cent on news that US inflation hit another 40-year high in September. Then it rallied and surged to close up 2.5 per cent.
That's a swing of more than 5 per cent in a single day. That's not a rational response. It's manic.
I didn't see any good news in the US data.
Topline inflation came in at 8.2 per cent per annum, a tick down from the August peak at 8.3 per cent but still stronger than expectations.
Core inflation - the number with more volatile food and energy prices stripped out - came in at 6.6 per cent, higher than in August.
It all adds up to an inflation fight that will take longer to win.
There's now talk that the US Fed's next rate move might be an unprecedented 1 per cent hike.
Either way, that's going to keep the US dollar strong and the rest of the world's currencies weak, keeping the costs of imported goods elevated and making it harder for us to beat inflation.
That of course increases the chances of a recession and - as hard as it is to imagine right now - rising unemployment.
We'll get a local inflation update for the September quarter on Tuesday.
Despite strong food price rises and ongoing labour market strength, economists expect it will have peaked.
June quarter consumer price index inflation was 7.3 per cent, the consensus of local economists is that we'll see the September quarter land between 6.5 per cent and 7 per cent.
The fall in oil prices across the past quarter should ensure that.
But, as with the US, it is core inflation that matters and that is likely to remain at or near 30-year highs.
Before this column goes "fully gloom" it's worth remembering how strong the New Zealand economy is at a fundamental level these days - how well structured it is to fight inflation.
We're not back in the 1970s.
Just having a floating exchange rate puts us in much better shape than we were back then.
Our exporters have strong markets for their products and the combination of high commodity prices and a low dollar means we still have plenty of money flowing into the country.
Federal Reserve Chair Jerome Powell. Photo / AP
Tourism is also rebounding fast.
We have a Reserve Bank that is aggressively hiking rates - even if some will say belatedly.
And we have extremely low unemployment - at 3.3 per cent.
Of course, that labour market is part of the problem and domestic inflation is going to be tough to beat while we don't have enough workers to meet demand in the economy.
That's why it's crucial that we open the path for more migrant labour.
The alternative is waiting for the Reserve Bank to bring demand down - and that might mean recession.
We need to get core inflation down because oil and food commodity markets are outside our control.
Relying on them to do the work for us would be very risky.
Thankfully, Opec's efforts to cut supply and force prices back up earlier this month didn't really work.
But the world remains vulnerable to a second oil shock. That's what happened in the 1970s (with price shocks in 1973 and 1979) and it caused no end of problems for the global economy.
Either way (and yes that is the end of the cheery bit), we face a difficult economic downturn in the next year or so.
Last week, two economic outlooks - one international and one local - offered up a grim prognosis.
"The battle to get inflation back under control, both globally and in New Zealand, is set to stunt economic growth throughout the next two years," said local economic consultancy Infometrics.
"The worst is yet to come, and for many people, 2023 will feel like a recession," said the IMF in a report downgrading growth expectations around the world.
Both reports came with a lot more detailed analysis than that.
But those two statements capture the vibe right now.
Infometrics chief forecaster Gareth Kiernan sees weaker global demand eventually hitting our export prices.
"The next two years represent a necessary sacrifice of short-term growth for longer-term stability and sustainability in the economy," Kiernan says.
He sees the official cash rate rising to 4.5 per cent (from 3.5 per cent now).
He has unemployment rising to 4.2 per cent by 2024 - to 5 per cent by 2026.
While that equates to an additional 60,000 unemployed people, Kiernan notes that is likely come about through lower job growth rather than mass redundancies.
Would that constitute a hard landing? It probably depends on your personal circumstances.
Thankfully we're still not looking at the kind of brutal economic reckoning we went through in the 1980s and early 90s, or even the sharp post-GFC shock of the past decade.
But, sadly, for now, the outlook looks increasingly tough.
