Shocktober Is Over - Global Stocks Lose $8 Trillion, Most Since Lehman

Eight. Trillion. Dollars...

And it's gone...

“The volatility you’re seeing is in reaction to a market that has continuously had a buy-the-dip mentality that is being challenged now,” said Rick Bensignor, president and founder of the Bensignor Group.

“The market is finally putting people’s beliefs to the test.”

October's Carnage at-a-glance...

  • Nasdaq 100 worst month since Oct 2008

  • S&P worst month since Feb 2009 (lowest monthly close since April)

  • FANG stocks crashed 21% in October - the biggest monthly drop on record

  • Semis plunged almost 15%, the biggest monthly drop since Nov 2008

  • "Most Shorted" stocks down 13.8% in October - worst month since Jan 2016 (or best for shorts)

  • S&P Financials dropped over 7% in October - worst month since Jan 2016

  • GSIBs (Global Systemically Important Banks) dropped over 10% in October, worst month since June 2016 (Brexit)

  • China worst month since Jan 2016

  • European stocks worst month since Jan 2016

  • Hedge Funds were hammered as Goldman's VIP Basket plummeted 11.5% in October - its biggest drop ever.

  • Stocks and Bonds both fell on the month (first time since Feb 2018)

  • This is the worst October for Junk bonds since 2008 (HYG saw record volume in October)

  • USD's biggest monthly gain since Nov 2016 (Trump election)

  • USD and Gold both rallied for first month since Feb 2017

  • Gold's biggest monthly gain against Yuan since June 2016

  • Oil's worst month since July 2016

While the world's stocks (ex-US) are down almost 13% YTD, US equities are unchanged (erasing the entire year's gains in October)...

 

So, let's start with China - because that's where the chaos seems to be emanating from...Chinese stocks in October fell the most since Jan 2016, despite the heavy hand of The National Team...

 

European stocks tumbled around 6% on the month - the worst month since Jan 2016... Italy and France were worst on the month

 

Despite ending the month with the biggest 2-day rise since the rebound from Brexit...

It was an ugly ugly month for US stocks...

In managing to close green today, the S&P avoided doing something it has never done before - not having one back-to-back positive close.

The Dow managed to scramble back above its 200DMA today but disappointingly closed below the crucial technical level...

As The Dow tagged the recent pre-plunge stops and dumped into the close...

We note that today's ramp was not a short-squeeze per se as "Most Shorted" stocks actually fell on the day. October was the biggest drop for "Most Shorted" stocks since Jan 2016...

Breaking the longer-term uptrend...

 

Bigger picture themes show growth stocks underperforming value stocks by the most since March 2001...Russell 1000 Growth/Value breaking below its 200DMA for the first time since March 2017...

Growth bounced back the last two days...

 

Only Staples and Utilities managed gains on the month... Energy and Industrials were worst

 

FANG Stocks suffered their worst month ever...

 

...led by NFLX and AMZN (even with the bounce on the last two days)...

 

Intraday trading in October was also extreme with TICK crashing twice to its lowest since May 2010's Flash Crash...

But even more stunning than that, Monday's swing this week was almost unprecedented as investor psychology switched from buy-the-dip to sell-it-all. The breadth gauge spiked to almost 1,500 before tumbling to about minus 1,700. Such a big intraday turnaround has happened only once before in data going back to 1989.

 

The percent of Nasdaq Composite stocks still above their 50- and 200-DMAs understandably has plummeted to the low double-digits.

Nasdaq stocks have plunged as one with intra-index correlation soaring in October...

 

If you need another example of the extreme pain in the tech sector, Nasdaq VIX is at its highest relative to S&P VIX since 2004...

 

Not all global equity markets were red - Brazil outperformed...

But South Korea and Argentina were worst...

 

Stocks and bonds both fell on the month - first time since Feb 2018...

 

October has been positive for high-yield bonds in every year since 2008, when the market tumbled almost 16 percent in the month.

It was also the worst month for HY bonds since Dec 2015 (and HYG - the HY Bond ETF - saw record volume)...

 

Energy HY bonds were the biggest laggard but every sector was hit...

 

Treasury yields were higher on the month (despite stocks plunge) with the long-end underperforming... (up 37bps in the last two months)

 

That is a dramatic steepening on the month - 2s30s +13bps (biggest since Nov 2016 - Trump election)...

 

The Dollar surged over 2.3% in October -0 its biggest month since Nov 2016 (election) to April 2017 highs...

Offshore Yuan fell for the 7th month in a row

 

EURUSD tested down to critical support levels today with the biggest monthly drop since May...

 

On the day the Turkish Lira tanked after the finmin announced plans to cut taxes... October was the Lira's best month since May 2003...

 

All the pesos were punished in October except Argentina - The Real and Lira also gained...

 

Cryptos were all lower on the month with Bitcoin the notable outperformer... vol has collapsed in Bitcoin too

 

Despite the strong dollar, gold managed gains in October as crude was crushed...

 

Gold and the dollar both rallied in October - the first time since Feb 2017...

 

Commodities were pretty much a one-way street lower all month...

 

WTI tumbled today back below its 200DMA with the worst month since July 2016... to the lowest in over 2 months

 

So are you buying this dip? With the rest of the world's markets and the most systemically important bank stocks all collapsing along with global balance sheets, roll the dice?

Do you feel lucky punk?

Let's hope the 'smart' money is dumb this time.