S&P Dips As Bitcoin Rips On 10th Anniversary Of Stock Market Peak

There's a chance tax reform may not get done!!! Inconceivable!!

10 years ago today, The Fed minutes were released sparking a buying frenzy pushing The Dow above 14k to a new record high - supported by a dovish Fed and a convinced public that job growth was recovering and all would be well. It turns out that the peak for the market that was followed a greater-than-50% plunge in stocks.

That week, U.S. President George W. Bush said the figures signaled “a vibrant economy” but a poll of top Wall Street economists found more than half still think the Fed will trim rates again this month to help the economy get past a housing slump and a surge in mortgage defaults. U.S. employers added 110,000 jobs in September and August’s job losses were revised into a gain in a Labor Department report on Friday that lifted some worry about a recession in the near term.

CNN Money wrote on the day of the peak...

Stocks drifted higher through the morning, flattened out in the early afternoon and then began to rise as investors digested the minutes from the Sept. 18 Fed meeting, released at around 2:00 p.m. ET.

 

"I think the market had a knee-jerk reaction to the idea that the Fed can cut rates more, if they need to," said Steven Goldman, market analyst at Weeden & Co.

 

At the Sept. 18 meeting, central bankers cut interest rates for the first time in 4 years. The minutes showed that the decision to cut the fed funds rate by a half-percentage point cut was unanimous, with the central bank worried the housing implosion and credit market crunch could hit consumers and the broader economy.

 

Also important to stock investors: the minutes showed that the bankers were a bit more confident about a sustained inflation drop, provided that the dollar doesn't keep falling.

 

Stock investors have been looking for evidence that the Fed will cut the fed funds rate by at least another quarter-percentage point, perhaps at the next policy meeting, which ends on Oct. 31.

 

The minutes seemed to provide that evidence because of the combination of the concern about the economy and the diminished concerns about inflation.

 

Goldman said that while the minutes didn't particularly reveal anything new, investors were probably relieved to see the central bankers "confirming what people have been thinking anyway."

So what would have happened if you bought 10 years ago...

Gold remains the winner since the prior market peak with stocks outpacing bonds and crude having been crushed.

Which is ironic as gold was today's biggest winner (as China came back from its Golden Week holiday) as stocks, bonds, and the dollar trod water on Columbus Day...

 

Stock markets drifted lower in the last hour without RP algos to pull off bonds and levitate stocks... (Small Caps worst day in 6 weeks before the standard panic-bid into the close)

 

And note that VIX was notably bid...

 

Retailers, Financials, and Healthcare were the biggest losers...

Health-care stocks lead to the downside on a cascade of negative news for everything from medical devices, to managed care, to drug distribution. Reports over the weekend that Trump was seeking to loosen regulations in health insurance which could lead to lower premiums has sent most of the managed care names into negative territory.

One quick chart to highlight well-timed RRR cut from China right before the Golden Week Holiday that sparked a relentless surge in US stocks... and which now they are back, equities start selling off...

 

It seems the Trump-Corker feud is indeed having an effect on the odds of tax reform...

 

FANG Stocks rolled over once again after the standard opening gap rip...

 

Perhaps the funniest movement of the day was the dual dip and rip of AMZN and GOOGL when Amazon headlines hit saying it is "Considering a serious bid against YouTube"...

 

The bond market was closed but futures signal a modest bid for 30Y bonds (+1-2bps) with the short-end flat...

 

While the dollar index went nowhere on the day - drifting modestly lower...

 

USDJPY snapped below key support, dragging stocks in sync...

 

The Turkish Lira was chaotic (after tit-for-tat visa wars)...

 

And Cable pushed notably higher, dipping around May's speech...

 

Gold and crude both bounced on the day...

 

While the dollar index went nowhere, Bitcoin surged back above $4800...

 

Bitcoin market cap popped back above PayPal...

 

As the rest of crypto space was dumped...

As @CEOCoinex noted, everyone is liquidating portfolios to purchase bitcoin so they can get the Free shares from the chain split. Watch for huge rebound after.