Last Week's Market Rout In Sector-Beta Perspective

Tyler Durden's picture

While it is true that following an epically volatile week , the S&P closed down only 2.2% (down 11% MTD and 6% YTD), the traditionally homogeneous distribution in domestic and global beta is starting to get unhinged. Stated otherwise, if one were to gauge by the S&P alone, one would massively underestimate the divergence between different sectors and countries. Therefore, we have summarized last week's performance in just two charts, which show the substantial dispersion in performance, and just how much more painful the week has been for those long financials and/or Korea. As central planners briefly lost control of the markets, is relatively value, gasp, coming back, if only for a short time?

And a bonus chart. Yes, you can't eat gold... but what if you gave it enough fertilizer? Gold and Fertilizer stocks were the best subsector by a mile in the past week.

A trend is emerging: when the world is coming to an end, buying end of the world stocks is probably a good idea.

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Long-John-Silver's picture

Sell Gold and Buy Fertilizer? Who knew trading Gold for Shit could be profitable.

anynonmous's picture

clearly the fault of the Tea Party, Simon Johnson who is occasionally featured on Zero Hedge, unloads on the Tea Party in a blistering attack blaming them for just about everything including this week's market action

CrashisOptimistic's picture

I don't quite know if people understand what The Tea Party stands for.

The Tea Party doesn't care all that much about abortion.

The Tea Party doesn't actually care all that much about taxes.

The Tea Party wants drastic, immediate cuts in government spending, of any kind at all, and that includes DoD.

The GOP addendums of no taxes and protect DoD are concepts that are GOP focus, not Tea Party.  The GOP agrees with the idea of deep spending cuts so the two factions are aligned on that matter, but to ascribe to the Tea Party what someone might want to imagine is far right GOP attitudes about matters that have nothing to do with spending is not accurate.

The Tea Party is a true, single issue movement.  It is the most important issue America has faced since the Soviets surrendered.  SLASH GOVERNMENT SPENDING.


Long-John-Silver's picture

TEA Party members that are (old time conservative) Democrats have lost their fear of Liberal/Progressive Democrats and it's leaders. Watch them enter Democrat primary races and win most of them.

Manthong's picture

Anybody remember back when Clinton was running and "liberal" was a dirty word?

WTF happened? 

max2205's picture

This is TPTB crash which will be pinned on the tea party. The tea party is scarring the crap out of the elites in the USA. I am routing for the USA and the tea party to not waiver. This must get done.

New_Meat's picture

max: they are sure trying to pin this on the TP.  See, e.g. the pigfucker axelrod in this inane rant:

"The tea party is scarring the crap out of the elites... "

Well, no, actually the TP folks who I've seen have been entirely non-violent.  The elites are getting by without any physical harm or damage  (while delicious to consider, probably a good thing in the big picture as it exists so far).  However, they might be wetting themselves.

And I sure hope that the USA isn't in a rout.  But it will take the '12 election to see whether that happens.

- Ned

11b40's picture

Yeah - slash spending, just leave my Social Security & Medicare alone......not that I disagree.

Sudden Debt's picture

You did pay for your gold with Crappy fiat... FULL CIRCLE!!

Flakmeister's picture

Hey LJS.... I have long touted gold, Potash Corp. and Terra Nitrogen on this site.... POT may well be the most important and valuable (beyond what is valued by our financial seers) publicly traded company in the world. TNH just spins off cash to the shareholder, $11.35 so far this year which is treated as return of capital, i.e. tax deferred.

YC2's picture

so maybe i will start putting bags of manure in my closet, and hiding my gold in them.  The mad max theives will really have to have a strong hunch to get it, and maybe one day I will grow a hard money tree!

Smiddywesson's picture

I can't you, my son and I are sharpening our boomerangs

chartcruzer's picture

or,,  stated slightly differently..  

the nasdaq continues to kick ass as a long while the best short is the russell[s164302276]&disp=P

in international asia is the stongest while europe is the dog[s235660895]&disp=P

in commodities precious metal are king while energy/oil suck gas (ouch)[s163683605]&disp=P

you can monitor all this in real time..[s168183494]&disp=P


Manthong's picture

Boy did THAT put some stuff in perspective for me.  Thank you.

CrashisOptimistic's picture

Which would you rather have on your land when SHTF?  One ounce of $1700 gold, or sixty-eight $25 fruit trees?

jon's picture

if you have that ounce of gold, then any plot of land is your land. you can just pick up and go to where the S is not H any F at all. let some fool watch his trees get burnt down by the zombie horde.

Long-John-Silver's picture

Or the government simply barges in dressed in SWAT uniforms and takes not only the the property your fruit trees are located on, they take everything else too.

They will take it so Homeland Security will have a base of operations to protect the fruit trees. Imminent Domain Bitchez!

CrashisOptimistic's picture

If they can fund SWAT teams, they will task them with gold confiscation rather long before peach confiscation.  

Easier to carry.  Peaches are heavy and hard work to make grow well.

cowdiddly's picture

OK, Ive been listening to the gold confiscation meme for five years now. Now I will tell you the facts. THe gov't never confiscated the gold,they were taking it out of circulation. They made it illegal to own. People were required to turn in their gold and were paid 35 dollars per ounce. Granted, after they gathered up the gold they immediately made it worth 45 per ounce. Only an estimated 5-10 percent was ever turned in. Hey guys, Grandpa wasn't that stupid and he had a shovel and lived in the mountains. Numismatic coins were exempt due to there extreme value over spot, hence you still have a 1906 St. Gaudiens,and 1920s Indian head coins today, some even dated 1933....hummm. Something to think about as you buy yourselves coins vs bars. I highly doubt that they will bother today, as only about 2 percent of people today own gold, as gold has not been in circulation in my lifetime other than certificate form, unlike then, where every one had a few gold coins. They are ogling your 401K today, where your real money is.  

In Vino Veritas's picture

Actually, gold was nationalized - at approximately $20 per Troy ounce (not $35).  The Feds then revalued it to $35/Toz (not $45).

Indeed, they are casting very covetous eyes on the 401Ks - a source of significant worry to us.  We terminated our contributions recently for this very reason.

CrashisOptimistic's picture

Look, let's get serious about this.

It costs too much money to confiscate gold, and no one is going to confiscate fruit orchards.  Fruit orchards can actually feed the soon to be hungry.

What will happen is one of two things, and soon.  Either gold TRANSACTIONS will be outlawed (own all you want, perfectly legal, but do not buy, sell or trade it), orrrrrrrrrrrr and much more likely, tax transactions of gold and silver.  

At 50-75%.  That is an effortless, revenue raising event.  No swat teams, no knocks on the door.  Pay your taxes.  The IRS enforcement mechanisms are already in place.  Buy, sell or trade and pay taxes on the event.

You can even get it through the House of Reps by cutting taxes on some other event so the whole thing is revenue neutral.  I can hear it now.  "No need for taxpayers to be denied some portion of these transactions that do not bring any benefit to society".


Pegasus Muse's picture

on taxing transactions of gold and silver. 

If they impose a tax, PM transactions will still occur -- they'll all be of the "cash & carry", barter, blackmarket variety. 

In Vino Veritas's picture

Perhaps true WRT metals.  But I share the concern regarding 401K nationalization.  Congress has had hearings on the subject already (ref. Teresa Ghilarducci).  Precedent has been set in a number of countries with private pension plans being nationalized/confiscated/etc.

dwdollar's picture

What???  When it gets that bad, they won't give a shit about 401Ks.

Keri at Bankster Report's picture

Well, instead of just "listening" to the "meme," you ought to do some research.  Now you will tell us "the facts"?  Let me tell you the facts.

Firstly, the government did confiscate gold from individuals, including on the bank-level by raiding safe deposit boxes and replacing the stolen coins with notes (especially in the NYC banks).  There's a very important court case on the matter (Frederick Campbell).  The State Department was actually--really--- "visiting hoarders" to collect the gold, and when those people refused to surrender their property, there were subject to 10 years incarceration and a $10,000 fine.  This was first reported by Time magazine in October of 1933.

Secondly, as the other poster noted, your numbers are all wrong.  The face value of double-eagles at the time was $20, not $35.  Double-eagles (NOT troy ounce price of gold, as double-eagles have slightly less than an ounce) were re-valued by FDR at $35 with a stroke of the pen---AFTER the banks (through the Fed) had possession of the gold.  And where on earth do you get this "only an estimated 5-10 percent was ever turned in" statement?  The Treasury has records on the matter, and it was much HIGHER than this number due to the very reason that the State Department was actively siezing gold from people (especially "hoarders").  The US has NEVER valued gold as $45/oz: even today the official price is only $42.22/ troy ounce.

Thirdly, the government is still taking gold coins: the last case I know of was just a few years ago in 2005 (Berke/Swift).

Finally, there is no such thing as a "1906 St Gaudens": the first year of issue was 1907, and the first issue was high-relief.  And, Gaudens---with the exception of the 1907 high-reliefs---were not included as "numistmatics" because they were current-issue (also, only some--again, some--Liberties and Indians, etc, were deemed "collectibles", and the burden of proof was on the collector).  Either way, the people could not use the coins as legal tender.  You state that the numis had an "extreme" value higher than face, but VERY FEW of even the numis had a value higher than 175% face, which as noted above, was the re-valuation penned by FDR once the banks had the gold ($20 to $35).  Of course, since 1933, all of them have a value much higher than face, but in 1933, this is was NOT the case.

As for the 401K being the "real money:"  oh, yeah?  Do you honestly think that the government has an interest in seizing digital money?  If it did, would not the banks be a better target than 401K's?  The government is run by banks: they will go after whatever has value, because when people have something of value in their possession, then the people have power.  The endgame is removing all power from the individual person: if they have to take gold, they'll take gold; if they have to take water, they'll take water.  Don't be so confident---and do yourself a favor and do some research on your own instead of listening to "memes" and repeating untrue non-sense.

Medea's picture

Perhaps the best response/comment I've ever read on ZH. For many reasons.

Doña K's picture

Yes! And in other words... best thing to do is to get the hell out of this country. Soon to be third world fascist country. Take your PM's with you.

BTW: shipping gold out of the country is not illegal (at least right now). Get your overseas addresses and start shipping it to yourselves, in small increments. Find out which countries do not impose duty on bullion. Canada, Switzerland are two.

sabra1's picture

with all the chem-trail poisoning going on, does it make a difference? why are you americans just taking it? DO SOMETHING!!!!

Feds Want to Require License to Drive Farm Vehicles


Sonny Riddle
August 12, 2011

A new rule being proposed by the federal Department of Transportation would require farmers to get commercial drivers licenses.

The Federal Motor Carrier Safety Administration, which is a part of DOT, wants to adopt standards that would reclassify all farm vehicles and implements as Commercial Motor Vehicles, officials said. Likewise, the proposal, if adopted, would require all farmers and everyone on the farm who operates any of the equipment to obtain a CDL, they added.

The proposed rule change would mean that anyone who drives a tractor or operates any piece of motorized farming equipment would be required to pass the same tests and complete the same detailed forms and logs required of semi-tractor trailer drivers.





Free Newsletter - The Infowars Insider

New_Meat's picture


"Imminent Domain Bitchez!"

I love it!

WaPo has this great contest: change, add, or delete one letter in a word and come up with a new definition, e.g.:

And your phrase exactly captures what is gonna' happen.

Good Work.

- Ned

[ed. my favorite is "Reintarnated"--coming back to life as a hillbilly]

{not that there is anything wrong with that ;-) }

Smiddywesson's picture

Dolt, zombies crave brains, not fruit.  However, if you are smart enough to have gold, you better watch out, they can sniff out your big ole brain.

css1971's picture

Double digit tonnes of carbon in the form of charcoal. Ironically solving the greenhouse effect as it becomes irrelevant.

The fruit trees I can grow myself. Just to point out that fruit trees take several years to reach fruit bearing age whether they are seeds now or 1 year $25 striplings.


disabledvet's picture

Next week will be a wild one. Love growth stocks acrosss the board as the great yield blow out commences. No one has discussed in depth what actually constitutes risk but now they will know. I'm not in a very giving mood this time around so let's see who's been getting the zerohedge memo. One hint: nuclear power at every level is risky.

dwdollar's picture

My wife and I were talking last night.  If someone, anyone, could give us a scenario or solution on how the world climbs out of this Keynesian death spiral we would listen and maybe believe it were possible.  BUT, no one is doing that.  All we hear from everyone is "You're being too negative" or "Why are you so pessimistic?" or "Are you crazy?  Now is the time to buy!" or "It always comes back." etc., etc.  Those aren't scenarios or solutions, those are denials and delusions.  Probably not unlike the patronizing accusations of those who chose to stay in Rome as the barbarian hordes drew near.

Next thing you know, people like us will be blamed for the collapse, just because we were literate enough to understand the writing on the wall.  What a f'cking joke.

jon's picture

i think you are under the impression that the parasite has become the host.

the death culture (john paul ii and abbie hoffman both called it that) really kills only itself, and those who attach themselves to it. and good riddance!

Caviar Emptor's picture

All we hear from everyone is "You're being too negative" or "Why are you so pessimistic?" or "Are you crazy?

Denial is still a potent defense mechanism against reality. But don't underestimate the power of those who do get it to try and pull the wool over the eyes of the sheep. There's a world of pain growing and festering out there. There is fear about the anger that can produce: London, Birmingham, Manchester, Liverpool were all vivid examples . So is the Arab Spring, Greece and growing unrest in Spain. But don't think it hasn't already hit our shores. As discussed last night, MSM are burying the stories on page 16. Philadelphia already instituted a curfew for all teens in downtown to stem violence. In San Francisco, wireless communication was cut in the BART system to avert a protest. The battle lines are being drawn. 

Manipulism's picture

I didnt know what they were doing in this Fema (Konzentrations)camps.

I only followed ordes just like the guys in Germany 1944.

CrashisOptimistic's picture

Good point.

Also, and this is critical, the elites positions depend on the juggled balls staying in the air and THEY WILL DO ANYTHING TO MAKE THAT HAPPEN, INCLUDING MURDER (case in point, Gadaffi, case in point forbid short sales).

I am 100% confident that TPTB will continue to do anything at all to maintain their power, and I am similarly confident that they have the power to do that up until the one thing they cannot control asserts itself: oil.

It is oil that will take it all down.  Do not expect anything else to be able to do it -- not even US riots with gunfire.


css1971's picture

The solution is paper, inflation and the reserve ratio.

Instead of issuing new money as credit, print paper.  The paper circulates paying down the debts. Use not interest rates, but the reserve ratio to reign in the multiplier of the banks, ultimately until the fractional reserve is full reserve. Result, debt decreases, economy continues functioning, inflation is high but not hyper. Eventually the debt problem is solved.

The problem is... The people at the top end up at the bottom. Their ability to create money goes away, so it is never going to happen.

dwdollar's picture

"The problem is... The people at the top end up at the bottom. Their ability to create money goes away, so it is never going to happen."

Exactly.  There's no meaningful solution that's going to be accepted.  It would require too much sacrifice.  Ninety percent of society today is nothing but a bunch of shallow, myopic, self-serving thugs.  Therefore the most logical conclusion is an express train to hell where we meet complete and total collapse.

It's already like Mad Max at 7/11 stores.  Some people are really desperate to get a cheap tank of juice.  A week ago there was a fight at the pump.  Looked like there was going to be another this morning, so I just drove by.  Saving a few bucks isn't worth risking my life at this point.  However, A LOT of people ARE at that point.

WonderDawg's picture

Yep. Just recently I got this, from a lifelong friend: "If enough people believe as you do, it becomes a self-fulfilling prophecy." I just shook my head and made the putt.

Smiddywesson's picture

 If someone, anyone, could give us a scenario or solution on how the world climbs out of this Keynesian death spiral we would listen and maybe believe it were possible. 

OK, Smiddy's bedtime fables presents, the rosiest future I can conjure:

Once upon a time, deep in the beginnings of the century, a person named Al "the Maestro" helped hasten the demise of the USA.  His successor Ben did what he could do to reinflate the bubble, but it didn't work this time.  All the central bankers looked at each other and said "shit, what now?"  Now Ben was a crafty little guy, and knew that he had to hit the reset button.  Unfortunately, that required all the big governments and central banks in the world to cooperate.  The problem was the central banks and the governments didn't want to cooperate anymore.  You see, the attempt to reinflate the bubble made the governments just as insolvent as the banks.  The governments wanted to hyperinflate so they could pull a chew and screw on their creditors, and the banks didn't want to hyperinflate because that would allow their debtors to pull a chew and screw on them.  That's when Ben said, "I know, lets inflate slowly and change to a different measuring stick."  After all, you are not so fat if you change to clothes two sizes larger.  China, the sole beneficiary cried and moaned, but everybody told her to STFU.  You see, if everybody is broke, the person who they owe money to is no longer in the driver's seat.

So we created an inflated equities market, and started quietly buying gold.  The banks rejoyced, because they knew what the game was, and they of course were tipped to each and every announcement over the course of the next several years, thereby producing near perfect trading quarters. The sole long- term action that was taken, purchasing gold, quietly continued.  

Eventually, the bubble in equities came to an end, because mom and pop finally got it that the fix was in.  Fires broke out all over Europe, beginning in Greece.  Nobody understood why we had spent so much money bailing out foreign banks and kicking the can, because they were looking for reforms of a hopelessly terminal system.  Nobody understood that the fix was to create a new measuring stick, not fix the unfixable.  Meanwhile the slow purchasing of gold by central banks and governments around the world, the only real change in reality or reform that mattered, went unnoticed by the general public.

Eventually, gold went vertical, they could no longer control the silver market, or general mayhem ensued, none of the survivors left a record of what happened, because that history has been rewritten many times.  An emergency G-20 meeting was called, and a new Bretton Woods type agreement was announced.  We were told we were being put on a "gold standard."  All trading in gold was suspended.  Some countries nationalized their gold mines, but not here in the US.  This scam originated in New York, and they had all the gold they needed.  Eventually, gold markets reopened, and prices briefly reached the $60,000 level again.  The nation states and the big banks were solvent again because they had most of the gold.  China had a lot too, but complained so much TPTB told her to STFU.  Besides, by then the rioting in China was so bad there wasn't just one China anymore, there were several.

In announcing a gold standard, when the central banks and governments of the world held most of the gold, they handed the central banks the means to devalue everything in the world and tax us all.  If everything is valued in gold, and central banks control the measuring stick, that is, gold prices, then they can take half of everything you have just by doubling the price of gold.  Ben and his friends went down in history as heroes of the New World Order.  Ben is long since gone, but his successors are slowly releasing that $60k gold onto the market, enriching TPTB at the expense of the people at the rate of 1% of everything they have per year.  It is the same old game used under the fiat system, stealth tax everybody and let the politicians take the heat.

And they all lived happily ever after. 

New American Revolution's picture

The TEA Party has certainly lost its focus, but that isn't as unsolvable a problem as the wheels of the Politburo coming off the tracks and hastly put back on.    You don't need me to tell you that it is temporary and was accomplished only because most of the Politburo decision making world and everyone else is on vacation.    They won't have this luxury come September and October when the vultures come back home to roost.   Typical fall pattern of market destruction developing here, and I can hardly wait.

New_Meat's picture

... er ... What "focus" was there and what "focus" was lost.


- Ned

Buyemall's picture

where's the rest of it Tyler?