Is This 1987 All Over Again? What’s Driving the Market Meltdown?

Financial markets are supposed to capture the wisdom of the crowd, but on Monday the crowd ran in all directions waving its hands in the air screaming. Japan’s stock market fell the most in 37 years and the VIX index of implied U.S. stock volatility had the second-biggest rise in data back to 1990. Panic hit.

The selloff was triggered by Friday’s jobs data prompting a sudden switch in the economic narrative from soft landing to hard landing. Add to the mix a period of deflating hype about artificial intelligence and a Bank of Japan rate rise designed...