Credit deflation and the reflation cycle to come.

[sancho panza]

7 hours ago, Inoperational Bumblebee said:

Another thing I like about the miners is exchange rate effects seem to happen at the same time. PMs up, miners up more, Sterling down amplifying the gains.

It would never have occurred to me to buy miners before this (and the ToS) thread, and I'm perfectly happy with the volatility given my exposure and the fact it's much lower than crypto...

That made me laugh.Has to be one of the understatements of the year.

I follow a lot of charts and have to say when you study the PM miners,aside from using a couple of long term indicators,I generally ignore company specific charts as they're unreadable and totally unpredictable in most short/medium term timeframes.

[DurhamBorn]

8 hours ago, Bear Hug said:

It depends. I can't actually transfer a chunk out to SIPP from my current work's DC fund unless I leave the scheme completely for a while.  But then I will lose matching monthly employer's contributions. They do offer a few funds but it's mainly mix of UK/US equities/bonds.  Nothing sector specific like miners or utilities.

Even considering some dubious "absolute return" fund but it just looks like cash but eroded by higher fees in a long term...  

Its incredible how bad DC pensions are.The funds offered in my old Glaxosmithkline pension are laughable.One of the biggest pharmas in the word yet a shocking choice.My new employer is the same a  massive company,yet the pension choices poor.It seems everyone has now decided that low fee passive trackers are the way to go.As a contrarian when the crowd all think one way is certain i like to be on the other side of that trade.

I keep seeing someone say at 55 with say £100k when the markets slide and its cut to £70k (at best),then its moved into the "lifestyle" section as most corporate DCs do about 7 years from retirement,,mainly bonds,just as inflation gets going and bonds enter a long bear.That £100k could end up at £35k if the timing is really bad.

I think passive trackers were a very good choice for a dis-inflation cycle as money flowed into markets,but that doesnt say they will be in a distribution cycle.My answer would be allow people with a SIPP to have their contributions from employers paid direct into that.

[sancho panza]

I was walking the kids to nursery this morning and the thought struck me that whilst I remain a a debt deflationist,I'm none too sure that UST rates will head lower when the banking system starts deflating.

The sheer scale of UST issuance could make this some sort of stagflationary event ie credit deflation/price inflation, rather than outright disinflation or deflation.

Whilst you'd expect a flight to quality as people shed risk assets,there's a chance that issuance will swamp that demand,espcecially if foreigners continue to be net sellers.

[sancho panza]

?US recession

Hattip Wolf St podcast from t'other day

[kibuc]

Barrick Randgold merger could lead to $5bn asset sales, BMO says

https://www.ft.com/content/1aa93918-d6b1-11e8-ab8e-6be0dcf18713?desktop=true&segmentId=7c8f09b9-9b61-4fbb-9430-9208a9e233c8

 

Interestingly enough, 2-3 weeks ago B2Gold released a statement that they would be happy to snap up any African assets that Barrick is interested in selling. Worth keeping an eye on, this one.

[Barnsey]

11 minutes ago, sancho panza said:

?US recession

Hattip Wolf St podcast from t'other day

Becoming very clear @sancho panza that there has been a clear and significant uncoupling between $SPX and home builders/autos since summer (arguably the 2 most significant consumer sector indicators of a looming downturn), and i'm sure we're well on our way, take a look at the website for the U.S. National Bureau for Economic Research, otherwise known as the bearers of bad news (scroll down for announcement dates, showing cycle peak month and then subsequent announcement of cycle peak month)

 https://www.nber.org/cycles.html

The official announcement of U.S. recession is typically made between 6-12 months after entering one. Let's say they enter recession mid 2019, we probably won't find out until Christmas 2019 at the earliest. We're possibly looking at a repeat of 2000->03 according to Mark Yusko of Morgan Creek Capital (lots of respect for this guy even if he is a little Bitcoin happy, always entertaining to see the CNBC crowd nervously push back at him when he's on), with a reasonably drawn out 3 step decline over the next 1 1/2 years (which will please those on here with mining stocks no doubt), leading to a debt deflation in 2020. 

Mark predicts (bit like 2000->) single digit % decline in U.S. equities by year end, further 15% in 2019 with a shallow recession, followed by a further 20% in 2020 accompanying the debt deflation, totalling around 50% decline. Favours defensive stocks (Healthcare, Utilities, undervalued) along with China/Brazil/India. 

[Lightscribe]

1 hour ago, DurhamBorn said:

Its incredible how bad DC pensions are.The funds offered in my old Glaxosmithkline pension are laughable.One of the biggest pharmas in the word yet a shocking choice.My new employer is the same a  massive company,yet the pension choices poor.It seems everyone has now decided that low fee passive trackers are the way to go.As a contrarian when the crowd all think one way is certain i like to be on the other side of that trade.

I keep seeing someone say at 55 with say £100k when the markets slide and its cut to £70k (at best),then its moved into the "lifestyle" section as most corporate DCs do about 7 years from retirement,,mainly bonds,just as inflation gets going and bonds enter a long bear.That £100k could end up at £35k if the timing is really bad.

I think passive trackers were a very good choice for a dis-inflation cycle as money flowed into markets,but that doesnt say they will be in a distribution cycle.My answer would be allow people with a SIPP to have their contributions from employers paid direct into that.

Exactly. These ‘Lifestyle’ pensions are based blindly with no active management, so a persons entire pension could be transferred from one downturning sector to another at fixed intervals shedding capital. 

One point of note is that the civil service partnership pension options are moving away from Equitable Life, Standard Life and Scottish Widows. Monthly contributions have all switched from September to Legal and General in a default ‘Pathfinder’ fund. It will be interesting to see if this has an effect on people reevaluating their situations etc and moving to cash funds etc.

What I would say is at least the Pathfinder fund is actively managed and low fee. Not the worst (in a very limited list of options) for someone with no capital already in there, who’s contributions are going forward into a falling market. Now that the current direct benefit civil service pensions are linked with state pension age, pension options are limited.

Here’s a link if to the new fund list if anyone’s interested.

https://www20.landg.com/DocumentLibraryWeb/Document?lgrouter=CommApp&targetApp=MANAGEYOURSCHEME_DOCUMENTLIBRARY_ENTRY&reference=cabinet_office_pathway_investment_guide.pdf

[sancho panza]

27 minutes ago, Barnsey said:

Becoming very clear @sancho panza that there has been a clear and significant uncoupling between $SPX and home builders/autos since summer (arguably the 2 most significant consumer sector indicators of a looming downturn), and i'm sure we're well on our way, take a look at the website for the U.S. National Bureau for Economic Research, otherwise known as the bearers of bad news (scroll down for announcement dates, showing cycle peak month and then subsequent announcement of cycle peak month)

 https://www.nber.org/cycles.html

The official announcement of U.S. recession is typically made between 6-12 months after entering one. Let's say they enter recession mid 2019, we probably won't find out until Christmas 2019 at the earliest. We're possibly looking at a repeat of 2000->03 according to Mark Yusko of Morgan Creek Capital (lots of respect for this guy even if he is a little Bitcoin happy, always entertaining to see the CNBC crowd nervously push back at him when he's on), with a reasonably drawn out 3 step decline over the next 1 1/2 years (which will please those on here with mining stocks no doubt), leading to a debt deflation in 2020. 

Mark predicts (bit like 2000->) single digit % decline in U.S. equities by year end, further 15% in 2019 with a shallow recession, followed by a further 20% in 2020 accompanying the debt deflation, totalling around 50% decline. Favours defensive stocks (Healthcare, Utilities, undervalued) along with China/Brazil/India. 

As ever,appreciate your wide reading and insights.

Ref then last para,jsut looking at US housbuilders,looks like 2007/8...deja vu allover again.

These are the 4 biggest US housbuilers and iirc you floated Lennar to me as a short idea a while back Barnsey

Whislt you may think my recession call(I think the US is entering one now) early,these builders led the line on 07/08 like the UK.And I think we're in housing bubble number 2.

I've pared back my exposure to UK builders on the short side as I'm worried they're oversold and I'm transferring my gaze to the big US firms such a Facebook/Microsoft/Netflix.I anticipated starting to short these next year,but find myself drawn in( I put my first on FB yesterday but will likely staircase in).I like shorts I can sit on for some time.UK market looks heavily oversold(FTSE 100) imho-I could be badly wrong here.

Shorts wise-I'm sizing up L'Oreal/LVMH/Adidas on the basis of disproportionate share price growth versus revenue/net income growth and also Netflix/Tesla due to the fact they have negative cash flow and bond yields may be moving north.Also thinking Goldman Sachs looks a little high compared to bashing Euro banks have had

Edit.Gotta stop psoting ehre and do soem work

[sancho panza]

[sancho panza]

Schiff from August 07.The bank dip buyers start at 3 minutes.....check the Goldman Chart for how that call worked out.

 

[Barnsey]

4 minutes ago, sancho panza said:

As ever,appreciate your wide reading and insights.

Ref then last para,jsut looking at US housbuilders,looks like 2007/8...deja vu allover again.

These are the 4 biggest US housbuilers and iirc you floated Lennar to me as a short idea a while back Barnsey

Whislt you may think my recession call(I think the US is entering one now) early,these builders led the line on 07/08 like the UK.And I think we're in housing bubble number 2.

I've pared back my exposure to UK builders on the short side as I'm worried they're oversold and I'm transferring my gaze to the big US firms such a Facebook/Microsoft/Netflix.I anticipated starting to short these next year,but find myself drawn in( I put my first on FB yesterday but will likely staircase in).I like shorts I can sit on for some time.UK market looks heavily oversold(FTSE 100) imho-I could be badly wrong here.

Shorts wise-I'm sizing up L'Oreal/LVMH/Adidas on the basis of disproportionate share price growth versus revenue/net income growth and also Netflix/Tesla due to the fact they have negative cash flow and bond yields may be moving north.Also thinking Goldman Sachs looks a little high compared to bashing Euro banks have had

Edit.Gotta stop psoting ehre and do soem work

Likewise thanks for your regular on point analysis Sancho, much appreciated! Yes Lennar was one in my sights, to be fair you could probably pick any at this point to short and do reasonably well.

My 15p Flybe shares are down at 13p today, bit of a leap of faith but I can see them bouncing to 25-30p with a takeover bid, just too much of a tempting bargain to pass on.

[Lavalas]

1 hour ago, sancho panza said:

I was walking the kids to nursery this morning and the thought struck me that whilst I remain a a debt deflationist,I'm none too sure that UST rates will head lower when the banking system starts deflating.

The sheer scale of UST issuance could make this some sort of stagflationary event ie credit deflation/price inflation, rather than outright disinflation or deflation.

Whilst you'd expect a flight to quality as people shed risk assets,there's a chance that issuance will swamp that demand,espcecially if foreigners continue to be net sellers.

I’d like to think that, much the same as your trips to the market with your boy to learn about weights and measures or check on retail footfall, you’re actually discussing UST issuance with the kids on the way to the nursery whilst my tiny brain struggles to understand 

[Lavalas]

34 minutes ago, Sideysid said:

Exactly. These ‘Lifestyle’ pensions are based blindly with no active management, so a persons entire pension could be transferred from one downturning sector to another at fixed intervals shedding capital. 

One point of note is that the civil service partnership pension options are moving away from Equitable Life, Standard Life and Scottish Widows. Monthly contributions have all switched from September to Legal and General in a default ‘Pathfinder’ fund. It will be interesting to see if this has an effect on people reevaluating their situations etc and moving to cash funds etc.

What I would say is at least the Pathfinder fund is actively managed and low fee. Not the worst (in a very limited list of options) for someone with no capital already in there, who’s contributions are going forward into a falling market. Now that the current direct benefit civil service pensions are linked with state pension age, pension options are limited.

Here’s a link if to the new fund list if anyone’s interested.

https://www20.landg.com/DocumentLibraryWeb/Document?lgrouter=CommApp&targetApp=MANAGEYOURSCHEME_DOCUMENTLIBRARY_ENTRY&reference=cabinet_office_pathway_investment_guide.pdf

Thanks, I’d noted the change to L&G but appreciate your thoughts on this as I’m yet to move into the partnership scheme. I’m a novice with even thinking about my pension so need to understand what the benefits of moving into a cash fund now might be over just staying in my current scheme until after a bust has happened. 

Pensions would be a good thread, I need to learn.

[Majorpain]

34 minutes ago, sancho panza said:

Whislt you may think my recession call(I think the US is entering one now) early,these builders led the line on 07/08 like the UK.And I think we're in housing bubble number 2.

http://www.constructionenquirer.com/2018/10/24/banks-stalling-on-agreed-funding-for-projects/

The banks got badly stung in 2008, early signs they are looking at the more marginal/fantasy projects and going "really?". 

Quote

Meanwhile, a major contractor has told the Enquirer that it is struggling to extend credit for its early payment mechanism for subcontractors seeking to pay for better terms, despite rising demand from the supply chain.

Suppliers starting to run out of cash or credit is not going to end well... Fed tightening is making its way into the real economy with its many low cash/high debt companies completely dependant on bank overdrafts to stay in business.

1 hour ago, Barnsey said:

The official announcement of U.S. recession is typically made between 6-12 months after entering one. Let's say they enter recession mid 2019, we probably won't find out until Christmas 2019 at the earliest. We're possibly looking at a repeat of 2000->03 according to Mark Yusko of Morgan Creek Capital (lots of respect for this guy even if he is a little Bitcoin happy, always entertaining to see the CNBC crowd nervously push back at him when he's on), with a reasonably drawn out 3 step decline over the next 1 1/2 years (which will please those on here with mining stocks no doubt), leading to a debt deflation in 2020. 

A year for them to notice the economy is in recession is far beyond what I would have guessed, very interesting thanks!

[Lavalas]

14 hours ago, kibuc said:

The more I think about it, the more I think it will take a miracle for NGD to turn things around. They might be moving in line with the wider market for now, only slightly underperforming, but once everyone else starts reporting profits while NGD keeps sinking money down Rainy River shafts, that might be game over. A quick spiral towards zero, until one of the bigger players picks up the scraps.

There is definitely some movement, one of their vice presidents was given the boot yesterday, but it should be their next update on Rainy River that will make them or brake them.

Edit: Q3 results will be announced tomorrow (Wed) after close. I'm mightly curious.

Yep, results after close today and a webcast to discuss before opening (in the afternoon UK time). Sounds ominous, I might listen in. Even if the new guy turns it around then we’re talking years not quarters - will it last that long is the question, you’re right.

[DurhamBorn]

1 hour ago, Barnsey said:

Becoming very clear @sancho panza that there has been a clear and significant uncoupling between $SPX and home builders/autos since summer (arguably the 2 most significant consumer sector indicators of a looming downturn), and i'm sure we're well on our way, take a look at the website for the U.S. National Bureau for Economic Research, otherwise known as the bearers of bad news (scroll down for announcement dates, showing cycle peak month and then subsequent announcement of cycle peak month)

 https://www.nber.org/cycles.html

The official announcement of U.S. recession is typically made between 6-12 months after entering one. Let's say they enter recession mid 2019, we probably won't find out until Christmas 2019 at the earliest. We're possibly looking at a repeat of 2000->03 according to Mark Yusko of Morgan Creek Capital (lots of respect for this guy even if he is a little Bitcoin happy, always entertaining to see the CNBC crowd nervously push back at him when he's on), with a reasonably drawn out 3 step decline over the next 1 1/2 years (which will please those on here with mining stocks no doubt), leading to a debt deflation in 2020. 

Mark predicts (bit like 2000->) single digit % decline in U.S. equities by year end, further 15% in 2019 with a shallow recession, followed by a further 20% in 2020 accompanying the debt deflation, totalling around 50% decline. Favours defensive stocks (Healthcare, Utilities, undervalued) along with China/Brazil/India. 

Id agree with most of that Barnsey as well.The liquidity profile we used on the turn in US dollar liquidity showed liquidity falling (dollar) two years ago,but worldwide liquidity was on a lag (i think we got this pretty much right as our dollar calls were based on it and have been almost perfect the last two years).We had to give or take 6 months both sides due to being unsure how much of the debt based on the dollar liquidity was dollar debt if that makes sense.All been equal i think the debt deflation has started,but at the moment is masked by profits falling,but not to the point they cant service the debts (a few sectors have now passed into the range where they cant service).Numbers i see now point to the US "entering" recession right about now and we will hear about it in 6/9 months (or at best flat line growth).

The only place im torn on is the nature of the collapse.Im slowly seeing indicators that might be showing an inflationary recession alongside a debt deflation.If so we will get inflation cranking up for around 8 years (ending well into double figures).

The only reason i care is because of the PM miners.Its going to be a very crucial choice if they do run more if to sell or hold and if i should move into dollar assets or not.The blunt affect is im starting to see my dollar indicator show a road map down to 74.If it continues to show that then il consider it right and not move into dollar assets,but hold the miners much longer.

[kibuc]

16 minutes ago, Lavalas said:

Yep, results after close today and a webcast to discuss before opening (in the afternoon UK time). Sounds ominous, I might listen in. Even if the new guy turns it around then we’re talking years not quarters - will it last that long is the question, you’re right.

Actually, I think it might turnaround more swiftly, but Rainy River must start producing, and fast. It's been in ramp-up for, what, a year now?
They are drowning in debt and they have little chance of refinincing on reasonable terms, not with IRs rising. Share dillution is not an option, not after taking more than 80% in a year. Sell of Mesquite mine will bring $158mil instead of $500mil speculated earlier this year. The only way out seems to be a gold bull, but to take advantage of it you need to actually have some gold to sell.
However, base on available data, it seems more likely that they will miss it with Rainy River still in disarray, and that will be the end of it.

[A_P]

No source from what I can see (at the moment), but interesting chart I saw today of share of US equity investments

[Lavalas]

56 minutes ago, kibuc said:

Actually, I think it might turnaround more swiftly, but Rainy River must start producing, and fast. It's been in ramp-up for, what, a year now?
They are drowning in debt and they have little chance of refinincing on reasonable terms, not with IRs rising. Share dillution is not an option, not after taking more than 80% in a year. Sell of Mesquite mine will bring $158mil instead of $500mil speculated earlier this year. The only way out seems to be a gold bull, but to take advantage of it you need to actually have some gold to sell.
However, base on available data, it seems more likely that they will miss it with Rainy River still in disarray, and that will be the end of it.

I don’t think dilutive financing is out of the question - we’ll see.

[sancho panza]

3 hours ago, Lavalas said:

I’d like to think that, much the same as your trips to the market with your boy to learn about weights and measures or check on retail footfall, you’re actually discussing UST issuance with the kids on the way to the nursery whilst my tiny brain struggles to understand 

It's how I like my audiences lavalas---captive.Once they're in the pushchair it's listen to their dad or sleep.

To be fair,Mrs P's eyes glaze over if I even mention fractional reserve lending or monetary policy,so I have to tlak to the kids about it......or post on random internet forums wiht people I don't know.

[sancho panza]

3 hours ago, Majorpain said:

http://www.constructionenquirer.com/2018/10/24/banks-stalling-on-agreed-funding-for-projects/

The banks got badly stung in 2008, early signs they are looking at the more marginal/fantasy projects and going "really?". 

Suppliers starting to run out of cash or credit is not going to end well... Fed tightening is making its way into the real economy with its many low cash/high debt companies completely dependant on bank overdrafts to stay in business.

A year for them to notice the economy is in recession is far beyond what I would have guessed, very interesting thanks!

Thanks for that link.Fascinating reading,highlights are mine

 

'The FMB trade survey also paints a picture of continuing material price rises and shortages of key trades in the third quarter.

Brian Berry, FMB chief executive, said: “Growth among the UK’s construction SMEs slowed in the third quarter of this year. A range of factors are at work here, not least ever-increasing material prices.

“Anecdotally, we are hearing worrying reports of banks withholding previously agreed funding for projects which is delaying start dates and dampening growth. This may or may not be related to Brexit-nerves.”

He also warned the construction skills shortage continues to take its toll. More than two-thirds of construction SMEs were struggling to hire bricklayers.

Berry said: “These latest figures match the highest we’ve noted since records began a decade ago. These skills shortages are also leading to projects being stalled because there physically aren’t enough people to build them.

 

“Worse still, the scarcity of trades means that when construction employers can find people, they are paying huge salaries which is putting further pressure on margins.”

He added:  “This slowdown in growth should ring alarm bells for the UK Government and give rise to a total rethink of its misguided post-Brexit immigration proposals.

“If construction firms are unable to hire migrant workers post-Brexit, the already severe skills crisis will worsen. This will mean we won’t be able to the build the new homes the Government is keen on delivering and infrastructure projects will grind to a halt.

“It is imperative that the post-Brexit immigration system allows construction firms to continue to hire workers of varying skill levels. We hope the Government heeds the warning that these latest results show, before it is too late.”.'

 

 

Things not loooking good for the builders.heaven forbid,house prices drop or tehy'll be really fubar.

 

 

On the latter point,the drift into recession can easily be covered over by the initial estimations they use when they collate and collect GDP data(particualrly like things such as imputed rents) and obviously at the turn 0.1% turning to -0.1% three months later is no biggie in nominal terms but can lead to recession starts getting moved leftwards as the data firms.

[DurhamBorn]

A brick layer started working with me this week.He said Taylor Wimpey had pushed back starting two new sites from late this year to "late next year sometime".He said he was just getting their basic wage instead of that and bonus.He said it was good money as they were only laying bricks two days a week now,but then had to still be on site "sweeping up etc" for the other 3 days so that made it crap money (he said £350 a week then the rest was bonus on top) so he decided to leave "for the winter".I doubt he will get back myself.

This is just two sites in the north east of course,but says to me they are slowing building as they cant sell what they already have on the sites already being built.

[sancho panza]

2 hours ago, DurhamBorn said:

Id agree with most of that Barnsey as well.The liquidity profile we used on the turn in US dollar liquidity showed liquidity falling (dollar) two years ago,but worldwide liquidity was on a lag (i think we got this pretty much right as our dollar calls were based on it and have been almost perfect the last two years).We had to give or take 6 months both sides due to being unsure how much of the debt based on the dollar liquidity was dollar debt if that makes sense.All been equal i think the debt deflation has started,but at the moment is masked by profits falling,but not to the point they cant service the debts (a few sectors have now passed into the range where they cant service).Numbers i see now point to the US "entering" recession right about now and we will hear about it in 6/9 months (or at best flat line growth).

The only place im torn on is the nature of the collapse.Im slowly seeing indicators that might be showing an inflationary recession alongside a debt deflation.If so we will get inflation cranking up for around 8 years (ending well into double figures).

The only reason i care is because of the PM miners.Its going to be a very crucial choice if they do run more if to sell or hold and if i should move into dollar assets or not.The blunt affect is im starting to see my dollar indicator show a road map down to 74.If it continues to show that then il consider it right and not move into dollar assets,but hold the miners much longer.

I think we're possibly in for a inflationary recession running alongside a broad deleveraging across the banks worldwide.

I have no idea what the PM miners will do.Their charts are really hard to read and get an idea of where we are.Most of mine are down substantially from last year,the odd one is up.In my innocence,I'm coming to the view that I wll hold these and add more until we get a gold bull.At some point the piper will want paying and the CB's worldweide have little real capital to pay with.I can see PM miners rocketing from here and I can see them plummeting as well, in a broad sell off as the liquid gets chucked with the illiquid.I'm weighing when to add more for my next staircase but every day I think I'm going to do it,I end up holding back as the wider market moves put me off.That Wolf st podcast was saying something like 20% of US stocks have dropped 50% or more already.....jsut like we're saying about the UK having some roll overs in different sectors.

[sancho panza]

10 minutes ago, DurhamBorn said:

A brick layer started working with me this week.He said Taylor Wimpey had pushed back starting two new sites from late this year to "late next year sometime".He said he was just getting their basic wage instead of that and bonus.He said it was good money as they were only laying bricks two days a week now,but then had to still be on site "sweeping up etc" for the other 3 days so that made it crap money (he said £350 a week then the rest was bonus on top) so he decided to leave "for the winter".I doubt he will get back myself.

This is just two sites in the north east of course,but says to me they are slowing building as they cant sell what they already have on the sites already being built.

Coincides with soem anecdotal stuff down here as a mate of mine drives plasterboard round the country,They're laying off at his place.As ever,the signs are there if you look for them.That builder starting with you has lucked out imho,not only will he get himself a nice job but he;'ll get his pension sorted while you're doing whatever you do.

.Ref previous post US builders have topped out at the new year 2018 as well as the UK......looks like we're in it to me but I'm following my nose at the minute and despite my best intentions took profits across a range of shorts Monday(all my builder stuff) and my WH Smith.I jsut looked the gift horse in the mouth and took the money.I'm useless at sitting on things.

Edit to add-it'll go towrad covering my New Gold losses .....

 

 

 

You can tell I'm off work,20 posts a day..

https://wolfstreet.com/2018/10/23/stock-market-rotting-under-covers-russelll-2000-fangman-stocks/

 

On the surface, it still looks hunky-dory. For the 52-week period, the Dow is up 7.5%, the S&P 500 is up 6.7%, and the Nasdaq is up 12.7%.

Yet, even as major indices rose so nicely over the 52-week period, 496 individual stocks of those on the New York Stock Exchange dropped to new 52-week lows today, while only 8 reached 52-week highs. How many stocks are listed or traded on the NYSE depends on who you ask. The WSJ data section shows 2,080; others go over 2,400. If there are 2,080 stocks actively traded on the NYSE, this means near a quarter hit new 52-week lows today.

And according to my own math, 176 stocks on the NYSE have by now plunged at least 50% from their 52-week highs.

Despite the small drop on Tuesday of the major indices, here is what a random page in alphabetical order of the NYSE listings looks like in terms of red for the day – there is a lot of it, and it doesn’t even include Caterpillar, which dropped 7.6%:

In terms of the S&P 500 – which tracks the largest stocks in their industries, regardless of what exchanges they trade on – a whopping 353 stocks are down at least 10% from their 52-week highs, and 179 of them (that’s over a quarter) have dropped by at least 20%.

Why are the overall indices not down more? Well, Apple is a big reason.

The bunch I call FANGMAN stocks – Facebook, Amazon, Netflix, Google’s parent Alphabet, Microsoft, Apple, and NVIDIA – sported a market cap of $4.63 trillion at the end of August. Since then, they have dropped 7.8%, which is just another dimple (data via YCharts):

But individually, some of these declines are not so sanguine anymore. This is how these seven stocks performed since their 52-week highs:

• FB: -29%
• NVDA: -25%
• NFLX: -21%,
• AMZN: -14%
• GOOG: -13%,
• MSFT: -7%
• AAPL: -4.7%

So three of the seven have plunged over 20% from their recent peaks, and another two are down 13% and 14%.

But Apple, by far the largest among the FANGMAN in terms of market cap (still over $1 trillion), is down only 4.7%. This covers up a lot of bloodletting in the smaller stocks. And Microsoft, the third largest with a market cap of $830 billion, is down only 6.7%.

Those two stocks – AAPL and MSFT – make the FANGMAN bunch look reasonably well-behaved, and they soften the drop of the rest of the market.

For another view on the same scene, check out the small-cap stocks, the hottest performers until recently that barely even dipped during the January and February sell-off. Since August 31, the Russell 2000 index, which tracks them, has dropped 12%. And it’s down 1.6% for the year:

These are the hallmarks of a market that is rotting “gradually,” as the Fed would say, at every corner underneath the covers – the covers being a few large stocks, such as Apple, that have held up reasonably well. But they can no longer cover the rotting process.

Why? Why now? There are many theories. Four of the most basic theories are:

1. The stock market is ludicrously overpriced, and that sort of thing eventually and invariably unravels.
2. Interest rates are rising, and funding for these credit-dependent companies is going to get scarcer and more expensive, and so investors are re-doing their math.
3. Risk is being repriced, and investors are demanding to be rewarded more for taking those risks.
4. Yield investors, long drawn to dividend stocks in a ZIRP world, can now get better yields in Treasury securities, without having to take the risks associated with stocks.

On Monday, I discussed US bank stocks. The KBW banks index, which tracks the largest US banks, dropped some more on Tuesday and is now down 17% from its peak in January. But even that peak didn’t quite make it to the peak before the Financial Crisis. So that’s a big drop from very lofty highs. But EU bank stocks got crushed during the Financial Crisis, and then they got crushed and crushed, and now they’re getting crushed again. Read… It’s the Banks Again  '

[Barnsey]

1 hour ago, sancho panza said:

I can see PM miners rocketing from here and I can see them plummeting as well, in a broad sell off as the liquid gets chucked with the illiquid.I'm weighing when to add more for my next staircase but every day I think I'm going to do it,I end up holding back as the wider market moves put me off.That Wolf st podcast was saying something like 20% of US stocks have dropped 50% or more already.....jsut like we're saying about the UK having some roll overs in different sectors.

Same here 

Edit: I'm thinking that emerging markets are going to have to sell much of their Gold to stay solvent due to strong $ denominated debt, could potentially push prices much lower until $ reverses course after tightening stops and QE v4 commences.