Financial News

[StrangeSox]

Binyamin Appelbaum‏

@BCAppelbaum

Sad photo of Wall Street traders reacting as stock market plunges.

 

https://twitter.com/BCAppelbaum/status/960614104552689665

[southsider2k5]

Followed the chaos into the close and blew out of my VIX calls on the last trade of the day at 2.5 X's what I got into it. I saw a lot of panic in the last hour of trade and think we might have gotten the capitulation I was looking for. I am going to look at getting back in tomorrow at a discount if things are more calmed down.

[StrangeSox]

Lol, of course:

 

 

 

More lol

[caulfield12]

Trump sabotaged his own markets....50% of it was overheating the markets (and inflation fears) with the tax bill and the Nunes nothing burger/Constitutional crisis talk.

 

Now you’ve got government shutdown worries again as well as the budget caps/debt limit.

 

With PE ratio for the Dow around 26 and bond yields nearing 3%, that’s a lot of risk in the short term for a 1-2% advantages in buying stocks over bonds. Alibaba’s getting hit by massive shorts as a proxy for the Chinese economy, even though long term its a better play than Amazon or Ten Cent.

Edited February 5, 2018 by caulfield12

[Balta1701]

Trump sabotaged his own markets....50% of it was overheating the markets (and inflation fears) with the tax bill and the Nunes nothing burger/Constitutional crisis talk.

I don't believe this has anything to do with anything you just said. The market has been on a roll because the economy has been improving for a number of years; a slight overshoot followed by a correction is normal. The Nunes Memo is not the primary driving force affecting the economy, and there's little evidence that the actual wage growth is being significantly driven by the tax cut yet as most of that is going into share buybacks. There's no surge in business investment from the December or January numbers available yet, just the same level of business investment seen over the past year.

 

Just because other things are going on at the same time as the stock market doesn't mean the wild stock swings are caused by those other things.

[StrangeSox]

Earnings for Apple, Google, and Amazon missed a bit, and those three were some of the bigger drivers of the gains over the last year. Yellen and then the new fed chair both said they expect keep raising rates a bit, meaning the free/extremely-cheap money ride that we've been riding for years is going to slow down. The bond market is picking up a bit in response. Upward pressure on wages is also raising fears of inflation/driving up costs for companies, which will reduce stock values.

 

The Nunes wet fart almost definitely has nothing to do with it. Fears of increasing instability of government funding and debt ceiling may play a part, though.

[caulfield12]

I don't believe this has anything to do with anything you just said. The market has been on a roll because the economy has been improving for a number of years; a slight overshoot followed by a correction is normal. The Nunes Memo is not the primary driving force affecting the economy, and there's little evidence that the actual wage growth is being significantly driven by the tax cut yet as most of that is going into share buybacks. There's no surge in business investment from the December or January numbers available yet, just the same level of business investment seen over the past year.

 

Just because other things are going on at the same time as the stock market doesn't mean the wild stock swings are caused by those other things.

 

We can quibble over 40% or 50%.

 

For the first time (under Trump), financing the debt (partially created by the tax cut) is being looked at negatively, or honestly. Talk of trillion dollar deficits again, and cutbacks of Medicare, Medicaid and Social Security.

 

It’s fear...as is always the case. Psychology. Irrational exuberance, bubbles, bond yields, VIX, lofty PE ratios, rising wages triggered by tight job markets, a combination of all those things.

 

If bond yields are nearing 3%, why risk the 4-6% return that comes with exponentially more risk in the stock market?

 

And higher interest rates mean a drag on growth factors like business and capital loans, home mortgages/refinancing, car loans, student loans, etc.

 

You can’t discount the tremendous discord/divide in our political system (worst since Watergate), nor can we underestimate the possibility of a real international crisis this administration is frankly not organized or proficient enough to cope with.

 

The market is now expecting four 25 basis point rate hikes instead of just 3.

 

And if Trump blocks the Democratic Memo and the House overrides him...God knows what will happen in the short term. He hasn’t even processed what to do with Gowdy’s “betrayal” yet.

 

You can’t see the perceptions of complete chaos from an outsider’s perspective because you’re already in the system...but faith and confidence in the USA around the world is quickly eroding. That’s yet another factor. Add up everything, you have a long line of negative warning signals flashing yellow or red.

Edited February 6, 2018 by caulfield12

[caulfield12]

Earnings for Apple, Google, and Amazon missed a bit, and those three were some of the bigger drivers of the gains over the last year. Yellen and then the new fed chair both said they expect keep raising rates a bit, meaning the free/extremely-cheap money ride that we've been riding for years is going to slow down. The bond market is picking up a bit in response. Upward pressure on wages is also raising fears of inflation/driving up costs for companies, which will reduce stock values.

 

The Nunes wet fart almost definitely has nothing to do with it. Fears of increasing instability of government funding and debt ceiling may play a part, though.

 

Interestingly, Apple hasn’t been greatly punished in the last week despite nearly universal disappointment with IPhone sales (especially here in China), battery life issues, customers being manipulated into upgrading due to slowing operating systems, etc.

[Balta1701]

And btw, Consumer Financial Protection bureau drops its investigation into how Equifax lost the personal information of half of America.

[caulfield12]

We could, but why would we assign arbitrary percentages with no basis in reality to unrelated events that have no confirmatory value whatsoever?

 

How about you tell us in your infinite wisdom why the stock market has crashed for three consecutive days in a row?

 

Simply algorithms and profit taking, right?

[Dick Allen]

How about you tell us in your infinite wisdom why the stock market has crashed for three consecutive days in a row?

 

Simply algorithms and profit taking, right?

According to Hannity, its Obama's fault. I am not making this up.

[RockRaines]

Followed the chaos into the close and blew out of my VIX calls on the last trade of the day at 2.5 X's what I got into it. I saw a lot of panic in the last hour of trade and think we might have gotten the capitulation I was looking for. I am going to look at getting back in tomorrow at a discount if things are more calmed down.

I think its going to take more than just a day.

[caulfield12]

The problem isn’t that you don’t know it’s that you think you know. You’re making up stats. There’s no basis or methodology to your claims.

 

Doesn’t matter, your guy owns it now....Hannity’s “easy money theory” to the contrary.

 

24,000 mark is already a technical correction.

Edited February 6, 2018 by caulfield12

[bmags]

I have a hard time believing this will be prolonged.

[Balta1701]

Caulfield please stop making me agree with raBBit it feels icky.

[southsider2k5]

After I got out of the VIX yesterday I put in a low ball bid to get back in, and it got hit this morning on a hard sell at the open. I am back in.

[StrangeSox]

shouldn't that go in the gambling thread /green

[bmags]

Icahn came out today to regulate VIX products, and seeing more stuff like this (interview with one of the creators of VIX):

https://www.bloomberg.com/news/articles/201...-products-exist

Should regulators do something about retail VIX products?

In my wildest imagination I don’t know why these products exist. Who do they benefit? No one, except if someone wants to gamble -– then, OK, just go gamble… And who exactly made money? The VXX from its inception in 2009 is down, what, 99%, even after this move… It’s kind of sad that these products exist in the first place, but it’s hard to stop it. If you stop this, something else will come up. Bitcoin will come up.

[bmags]

The DOW is now up 500 pts.

[Chisoxfn]

The DOW is now up 500 pts.

Makes sense to me. Markets just aren't that inflated right now and I'd bet pretty fairly that (barring a political disaster / major war / etc) that 2018 will be a year of solid growth in the markets (I didn't say gangbusters). My gut tells me another 2 years before a mild recession.

[bmags]

Makes sense to me. Markets just aren't that inflated right now and I'd bet pretty fairly that (barring a political disaster / major war / etc) that 2018 will be a year of solid growth in the markets (I didn't say gangbusters). My gut tells me another 2 years before a mild recession.

 

It just seemed odd to me that a big month of wage growth or interest rate increases could cause a panic'd sell-off considering almost every bit of forward guidance I've seen plans for big wage increases and transportation hikes, and you'd have to be an idiot to be surprised by interest rate hikes.

[southsider2k5]

It just seemed odd to me that a big month of wage growth or interest rate increases could cause a panic'd sell-off considering almost every bit of forward guidance I've seen plans for big wage increases and transportation hikes, and you'd have to be an idiot to be surprised by interest rate hikes.

 

Whatever the excuse is, a market correction is long overdue. And honestly I would hope that today is a deadcat bounce instead of a real rally, as we are still pretty overbought to see the kind of intraday swing we saw today.

[Chisoxfn]

Whatever the excuse is, a market correction is long overdue. And honestly I would hope that today is a deadcat bounce instead of a real rally, as we are still pretty overbought to see the kind of intraday swing we saw today.

I believe you couldn't be more wrong. Yes, people can point at the highs of where the market is but the fundamentals just don't support being overdue for a mass correction and for a real market correction you have to have a "driver" for such correction and if that driver is out there, I don't see it right now. Even the tax cuts, while I can debate the actual impact on them, is just another thing that will (at least temporarily) push out a recession (more so if it is combined with an infastructure proposal)

. I might debate long-term implications and overall effectiveness of tax reform.

[Balta1701]

I believe you couldn't be more wrong. Yes, people can point at the highs of where the market is but the fundamentals just don't support being overdue for a mass correction and for a real market correction you have to have a "driver" for such correction and if that driver is out there, I don't see it right now. Even the tax cuts, while I can debate the actual impact on them, is just another thing that will (at least temporarily) push out a recession (more so if it is combined with an infastructure proposal)

. I might debate long-term implications and overall effectiveness of tax reform.

FWIW, I think the net result of the tax package will be the exact opposite, bringing a recession sooner. There is still some room for growth in the economy before full employment is reached, but the government dumping another $500 billion into the economy this year will make things heat up much more quickly. Basically all of the recent recessions have been triggered in part by the federal reserve overtightening once things actually begin to heat up enough to cause wage growth, so the net result of dumping in funds now through the tax cuts is going to be the Fed slamming harder on the breaks, and that is our recession trigger. So it will lead to more rapid growth in the short term, but it will also accelerate the next slowdown.

[bmags]

I am interested to see how Powell handles the hawks, who never change their argument but will likely have the first signs of actual inflation. I think Yellen would have allowed things to run hotter for longer and her record would have allowed her the cache to do so.