Rain

Does the Weather Drive the Stock Market....


...or is it the other way around? Or is the similarity, apparent on the graph, just a coincidence, the variation of the weather (shown on the top graph by the standard deviation of the past seven years of Los Angeles rainfall) compared with the Standard and Poor's 500, logarithmic scale.

Los Angeles, being on the edge of the desert, reflects the quirkiness of global climate, notably the influence of the westerlies in the lower latitudes.

Should the relationship between climatic instability and political economy be surprising?

No. Consider that 5000 years ago it was these same volatile westerlies that affected the fertile crescent stretching from Israel to Mesopotamia, the Indus and the Dead Sea, and that early civilations blossomed more or less simultaneously in all of these areas.

rlm / dak