So, are we seeing the much-touted correction that will bring western stock markets back down to earth after one of the longest bull runs in most people's memories? Certainly projections that the Dow would smash through 10,000 by the end of the year, dragging the Footsie into 7,000- plus territory, now look hopelessly optimistic. On the contrary, Wall Street and London have been staging a steady retreat, hand in hand. In the last three weeks the Dow Jones Industrial Average and the FTSE-100 have fallen by 8.5 per cent and 9 per cent respectively.
But no-one can really put their finger on the reason why. In the absence of anything more tangible, the triple jinx of Asian flu, Lewinsky blues and profit downgrades was being blamed for Tuesday's fall on Wall Street.
But the markets are all over the place, unable to decide whether deflation or stagflation is the greater threat and quite clearly dislocated from what is happening in the real economy. Wall Street's blockbuster performance for much of the last four years cannot be explained by the fundamentals of the US economy, strong though those have been. Instead it has been driven by the tide of money flooding into the mutual funds.
There is some evidence that the tide might now be starting to go out but it would take a mass panic among retail investors on a grand scale to justify the most bearish forecasts.
Meanwhile the US economy remains more at risk from spiralling inflation than economic downturn, if the chairman of the Fed is right. The Asian downturn could change sentiment but so far its impact has been muted. In so much as there is a global market, it has tended to expose the deficiencies of the Asian economies rather than allow them to infect their Western counterparts.
Investors looking for a clue in Wall Street's gyrations might reflect that while equities fell, long bonds strengthened. The past convention has been for equities to outperform bonds but if this is any pointer and there is a global slowdown underway then it could turn out to be a bond friendly one. The more the markets focus on corporate earnings, the harder it will be for equities to retain their current ratings. That will make a flight to bonds all the more attractive.