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Why This Sell-Off Is Different
It's different this time... and not in a good way. Real intraday range volatility over the last 2 weeks is breaking out - at its highest in 3 years...
That has not boded well in the past...
Chart: Bloomberg
h/t Brad Wishack via NewEdge
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Please crash (although I dont think the real downturn happens until 2015)
to-may-to
to-mah-ta
all good!
<--- Kill some folks
<--- Crash the markets
What will the October surprise be?
This survey seems rigged. Both kill folks.
I agree this survey is almost certainly rigged. ZHers are such saps when it comes to voting... ;-)
Also, heard some really scary stuff. First many workers from India work in W. Africa. If Ebola get loose in India, there will be global repercussions. Second there has been discussion about what will happen if Ebola gets started in Mexico and Central America. People will swarm the border and we can expect some of them will be sick. Keep an eye out for these two possible scenarios...
I also expect the crash to happen in either '15 or '16...
;-D
When ATR pops up for any reason, it's monkey-hammered down again by the flood of buying from 'market intervention'. This is evidence of manipulation and arrested drops, not evidence that 'this time it's really going to tank'. Why would they let it drop this time?
What sell off? Hung like a reverse cashew, compared to the massive "ramp" we've seen since '09. It will be at new record highs next week.....
As of right now I'm not convinced this is the big one. I wouldn't be surprised if there's at least another rally to new highs before the big dip comes.
"It's different this time... and not in a good way."
well, that depends
Depends...That reminds me, With this market, I may be about to crap my pants.
Better get some depends.
HEY CDC!!!! That guy crapped his pants. I think he has Ebola.
Why you being all cryptic? Are you saying go long Depends because of Ebola or not?
My programmed response to this is to BTFD.
My programmed response to this is to BTFD.
My programmed response to this is to BTFD.
My programmed response to this is to BTFD.
My programmed response to this is to BTFD.
Just not sure where.
S&P 500.
S&P currently at 1928. A good year for equity bubbles.
And Joy Joy...
My programmed response to your programmed response is
FUCKING IDIOT!
FUCKING IDIOT!
FUCKING IDIOT!
FUCKING IDIOT!
FUCKING IDIOT!
YOU MOOK!
Don't buy until the "Haines bottom" of 666 is taken out by -24.9%, S&P 500.
And don't try and short this cotton candy fluffed market or Yellen will have your teeth!
R.I.P. Mark: http://en.wikipedia.org/wiki/Mark_Haines
I have no horse in the game. However, I am not so sure there will be another bubble as we know them to be after this baby pops.
I'm pretty sure anyone who lived through the East India Trading Company or Tulip bubbles thought that humanity would never be foolish enough to repeat those mistakes either.
"No, just buy the fucking dip."
https://www.youtube.com/watch?v=0akBdQa55b4
You pissed some peeps off today.....What the hell is a MOOK
"Just not sure where."
If you are a big enough player it doesn't matter. If you fuck up, you have the trades canceled.
i think i said that earlier. thanks for following up on my post tyler.
March 2009!
S&P 666 true valuation!
if there was ever a number begging to get taken out
Perhaps, but a good argument could be made that true valuation is far below that number. If you will recall, the Fed was very busy creating that "V shaped recovery" during that time.
US QE1, QE2, and QE3 [edit]The US Federal Reserve held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Federal Reserve started buying $600 billion in mortgage-backed securities.[42] By March 2009, it held $1.75 trillion of bank debt, mortgage-backed securities, and Treasury notes; this amount reached a peak of $2.1 trillion in June 2010.
What I said before: Never sell a quiet market after a rise.
And this is not a quiet market.
The market will climb back to almost positive by the end of the day. No way the Fed will let the market go down. Late day ramp up coming in 3...2...1...
3:30. Aintcha been watchin'???
Agreed, but why are they letting it fall like this during the day? I mean wouldn't it make more sense for them to keep it up throughout the day as opposed to letting it keep dropping way down leading to an obviously manipulatory (made up word?) end-of-the-day ramp that everyone can see and predict?
Your first error in logic is "wouldn't it make more sense"
wrong,,,who'd a thunk it
Crash should only happen when all the money in the world will evaporate. If not, there is no crash. Chinese are buying (they are actually thinking of allowing onshore Chinese to start buying stocks overseas in the near future)....stock buy backs are buying...bonds issued by companies are stabilsing the balance sheets....capex is lowest while corporate cash and corporate profits at their highest ever...pension funds, SWF's and endowments have to have stocks and bonds...Swiss bank based tax evaded money is flooding in. etc.
While socially, unemployed will keep rising but it does not seem very likely that stocks will plunge to 30% or 40% down.
So let us see.
"bonds issued by companies are stabilsing the balance sheets..."
say what?
HY blowing out ... corporate balance sheets will be eating a sh!t sandwich come rollover
HY refers to companies at BB rating or below, which means they are medium sized companies not large ones.
If their businesses go bad, yes, they will default like they are doing the world over. However, if their businesses are doing well and they are growing, then they will be able to rollover, at prevalent interest rates in the future.
But large companies like Goldman Sachs, Apple, Ford, or now Russian Gazprom/Rosneft or Chinese CNOOC/Sinopec cannot simply default.
There was no reason for Apple, Microsoft or Verizon (largest ever) to issue bonds last year but to avoid US taxes and not bring overseas sales money back to US and then pay tax on it. This major loophole in US tax system that benefits tremendously the corporations but has an inbuilt major disadvantage to the individuals brings cash on balance sheets of corporates that is then used to pay taxes or do share buy backs or just sits on large balance sheets at 2% or 3% pa is a big win for such corporations and provides stability to their balance sheets as compared to 10 years ago when overseas sales and such tax loopholes were not as big.
Let us not confuse ourselves with HY companies that are run by honest businessmen and large corporations in US that are run predominantly by dishonest, tax saving, tax saver crushing, Govt controlling businessmen.
Honest businessmen,...well..they always have a tough life.
good points
but if you think taking on debt for no other reason than buyback/dividend is healthy to balance sheet ... have at it
Thanks Bells 2 hearted.
Think llke this. Apple has hundreds of billions outside of US in CASH sitting in Ireland and other low tax countries.
Let's assume it is USD 100bn.
They take USD 10bn by issuing bonds to pay tax, do share buy backs and keep cash for working capital etc and enhance value for their company and shareholders and make their balance sheet healthier.
Do you think Apple cannot bring USD 10bn from overseas, in the worst case scenario, to pay this USD 10bn issued in bonds from overseas?
There is no one stopping them but the tax dodgery of their own creation to bring it home.
They have the cash, they just don't have sufficient need to bring it back, thanks to their friends at the Fed who keep rates at zero and keep helping the billionaires and billion dollar corporations and not anyone else who has less than a few billions.
Thus Apple has good and productive debt, not unproductive and bad debt.
Now multiply this by dozens of large caps starting with all the banks, all the hotels, all the Starbucks, all the oil companies, all the defence companies etc.
There is something called good debt and something called unproductive debt. For example, China has all the trillions in the world, but they have been issuing so many bonds in the last few years. It is not that they need the money but they need to create a bond curve and an indicator of various entities on a global scale so they need to issue bonds which is all good debt (because they have trillions in cash reserves and generating income and current account surplus at the fastest speed possible). But in countries or companies whose businesses will collapse in the next few years like Blackberry or Sony or the Brazilian billionaire who went bankrupt like Batista or Indian billionaire who is in jail like Subroto Roy, they will have bad debt now because their plans did not work out. We take risk every time we issue bonds, but most large caps have so many politicians in their pocket that they somehow make it through bond rollovers, but if the business goes under like the Portuguese banking billionaire Santos then the good debt can turn bad in a jiffy!
Hope that clarifies my position.
Great breakdown of this. +1
If I'm reading you right, they are paying maybe $.04 on the dollar to borrow operating cash flow instead of repatriating $1.80 in order to get the same dollar of cash flow after taxes. Then they get to put the $1.80 into operations or investments, and earn much more than the $.04 they are spending to replace it.
Basically the cost of borrowing money via bonds is much cheaper than the cost of repatriating profits.
Pretty much what happens when dumb tax and monetary policy runs headlong into a bunch of smart MBA's. This isn't the corporations fault. Blame this entirely on politicians who have created a system that incentivizes bad behavior.
Im all for blaming bad politicians, but most i know of are dumber than a box of rocks. I suspect they had help.
and who paid for the politicians ?
no, i understood your position fine
and i agree that it helps the owners of capital get richer
but don't conflate that with balance sheet health. If we enter a recession (my position is that we'll enter soon if not already) margins will get squeezed for everyone ... making Interest expense an even bigger burder on income statement.
No problem with debt if used for PRODUCTIVE purposes ... but buybacks (fueled by debt in large measure) probably will be close to $700 billion in 2014
Large scale buy backs in itself prove that capex spending is lower and so are operating expenses and opportunities to profit from expansion.
Interest expenses may not become a problem if it remains at same levels as it has, over the last 5-6 years now. I see no reason for Fed and the US Govt to allow rates to hike to 5% or 6%. If that happens, we will have no recession, we will have collapses globally. You are right that interest expenses may become a problem, or not, if rates do not rise.
In future, everything will be high volume low margin businesses unless they are extremely innovative. The new generation has no jobs, no money, no potential with all the 7.2bn of us in this world fighting for survival. There is simply less money to go around. This has caused billionaires to become mega-billionaires just in the last decade which is unprecedented as to the polarisation of wealth and inequality in this world. This cannot go on. The rest of us will simply implode and stop buying anything thus equalizing the situation to a certain degree. However, this will take a long time. But we are seeing the results already. Debt or no debt, billionaires have gone bust and only existing billionaires - except in China (where they still create billionaires ala Alibaba) - are growing richer because they don't need anyone to support them with lending etc. Billionaires will reduce worldwide in the next decade but the remainder ones will become mega billionaires. Growth has come to a halt because people are simply unable to afford to buy as much despite the rising global population.
Some balance sheets will certainly weaken due to the businesses they are in but many others will evolve and become stronger. We have seen IBM has cashed out and sold to the Chinese thus strengthening their balance sheet. We have seen JP Morgan sell their HQ to Chinese and strengthen their balance sheet. We have seen HSBC and Citi have reduced their employees by over 50% in the last 6-7 years and thus improved their balance sheet. Many more have paid off debt or done buy backs to reduce dividends or simply stopped dividends in order to muddle through though have strengthened their balance sheets.
Times are tough, no doubt, but a massive recession seems unlikely. We are going through a once in a life time transition of human capital whereby the Western populations are becoming poorer and Asian populations richer. In addition, skills are being transformed like we saw at the turn of the millenium when IT took over and many Indians found jobs but Western ones did not.
There are many transitions occuring at this point in time which is causing slowdowns. Ebola, Middle East unrest, Ukraine imbroglio, currency depreciation, zombie banks, QE, unwarranted wars and completely hazardous - terrorist creating - drone attacks, unilateral self defeating sanctions on Russia, Somalia, Sudan, Iran, N Korea etc to name a few.
We still need to eat food, though less, we still need to clothe ourselves etc. But we don't need all the gizmos and cars and travels which are unproductive mostly. But we have our Chinese friends who are compensating for all the shortfalls in the Western hemisphere and rest of the world. They are buying more cars, more luxury goods, more gizmos than ever before, only the Western folks are watching them buy with their gaping eyes wide open!
Balance sheets will remain healthy but not as much in the Western hemisphere. They will keep selling themselves to the Chinese and maintain some stability on their balance sheets else they may perish. Imagine if Blackberry had sold themselves like IBM or Motorola to the Chinese. Or if AMC theatres that are 100% owned by China had not taken a new buyer, or for that matter the most expensive hotel in the world Waldorf Astoria, had they not sold day before to a Chinese buyer, would they still be the same icon they were a decade or two ago? They would have probably all gone bankrupt but thanks to the Chinese their debt will be rolled over, balance sheets are healthier, just that the future profits will go to China because there is a new sheriff in town and media wont let you hear any of that! They rather not tell you the obituary of a nation in gradual decline and its eventual demise but you will have to find out such tragedies on your own, because their impact is different on each one of us.
Balance sheets will remain, some healthy if they are value add or useful companies, others not, but the owners shall keep changing. Such is the history of time.
S&P is at trading at 1929. Coded message? Time will tell.
Why This Sell-Off Is Different = EBOLA
It sure is different. I'm speaking as someone who has direct knowledge about how serious money thinks--my relatives. They see a problem.
i sensed something wrong back in august
does not mean a crash imminent
but i don't see us getting thru the next 2, 3 quarters unscathed
August? Of which year?
It's different this time...
Yeah, whatever.
Who else jumped on this baby?
Everybody in the $LAKE
Don't catch the falling Ebola spittle
A 10% pullback in the S&P 500 would actually be welcomed for future bullish reasons.
But remember all time record high leveraging too.....what's it take to get completely wiped out with 30% leverage, a 3% drop? Just sayin.
And what’s up with that Rock and Roll Hall of Fame?? Who isn’t going to be invited?? Pat Benatar now…
A blip in the scheme of things. My money is on the ny fed to keep the s&p closed above cashin's "critical" 1926 level. It's still all nonsense even on these days where a little glimmer of sense creeps in.
Buy the bleach dip~!
This selloff is different because . . . I had my best ever Russell trading day, unlike Tuesday when I got whipsawed then missed the glorious ending. Just got out at 2:30, as I have a feeling machines will make a shameless VWAP play, then a big 3:31 dump. Yeah, may be missing another big ending, but I’ve been conditioned not to trust in price ‘discovery’ through 4:00. Give me a 500 pt down day, then next time I’ll be full in. Good luck to those riding the short train all the way to the station.
By the way, am I the only one suspicious about the dual 'bad cop' Bullard/Draghi market-smacking comments today? If the Fed is worried about bubbles, then was surprised by yesterday's reaction (given their complete lack of market savvy), could be the plan was to talk back yesterday's 'irrational protuberance.' (I know, I'm giving them far to much credit)
Did u the BFTD?
Hope this game playing today entertained u?
Like I've said in the past, when the time comes to sell it will have been too late because the whole damn thing will vaporize and there will be no escaping it. This is just noise.
Everything will be A-Ok before the weekend, that's the way these "sell offs" work.
Our beloved Zero Hedge deer is about to turn into a herd.
Tee-hee...! Pretend "money".
Jump, you f--kers!!!
"The FED can change what things look like, but, the FED can never change....".....ahh fuck it. Nobody cares.
THE FED arsewholes spouting- off on a daily basis is American corruption at it's zenith in history !
3:30 rally starts early?
S&P is less than 5% off its HIGH! zzzzzzzzz
yep. new highs guaranteed right belore election.
Because there's always an election around the corner.
Remember way back 3 weeks ago when all the 'smart money' piled in fully leveraged way higher, and the gloating about how anyone who didn't just missed the boat big time?
Just wondering if anyone else remembered that.
Not yet clear. Dow and SP500 both have another 1% to fall just to hit their 200ma. OTOH the McClellan Summation Index has broken below a year-old pattern, probably means the end of the bull for some time even if the indexes hold.
Remember, the Fed now is going to try to hold things in stasis with no QE. They're going to try to maintain ZIRP with no QE. They honestly think the economy is strong enough to do this. Then they can sleaze the rates up slooooowly. That's the game plan. And the Fed has ruled all of creation for the past six years, so there you go.
I'm long funeral homes. Lots of people will kill themselves when their retirement funds are completely wiped out.
You didn't get short monday, at the sell signal? Why not? Target is , and still is, 1900 area. Had another chance to get in, as it tested Resistance today.So, I guess you truly don't know how the algos work. Hmm,,,yeah, that sucks.
1984 'breaks the short'. Go figure...
we go retest half way to 666.8? haha if we lose this thang,,, aint' total doom and poop but bad enuf. you think some smartass at GS set a Buy order down there ON that number, a couple years ago,,,duh? huh?
Mockin' sob's. Hey, it is waht it is,,,didn't somebodysay that? "Define ISis"... "oh heck my daughter married that fine fellow tho outt'a her regilion from that fine wallstreet firm G'strin,,,"...huh/ what? What 'd he say?
F'g Hillaryious...