10Y bonds dollar Dow europe eurostoxx FX germany high yield S&P 500

There’s Too Much To Lose!

"We've come too far!"

Ok, listen. This is not the time to panic, goddammit.

After all, “we’ve come too far! There’s too much to lose!” 


Needless to say, some folks “lost their composure” on Friday and it was easy to see coming as soon as average hourly earnings came in hotter-than-expected. Note the time stamp:

The first signs of brisk wage growth were definitely not what equity bulls needed on a week where everyone was taking their cues from yields, which of course spiked on the AHE print:


Here’s an annotated chart for the week:


This was easily the worst week for stocks in more than two years:


As for the VIX, well:


This was the first time since Brexit that the Dow fell at least 500 points, and by the time it was all over, it was the index’s worst day since Brexit in percentage terms as well:


Here’s some encouraging news from Bloomberg’s Ye Xie, although I imagine it will be small comfort:

The good news is that a selloff of this magnitude historically hasn’t necessarily spelled trouble for future stock returns. The last time the S&P fell more than 2% in a week and the 10-year yield rose over 10 bps was during the taper tantrum in August 2013. The S&P returned +1.9% over the next month, and rallied 18% in the following 12 months. In fact, since 1980, the S&P gained 0.56% in one month and 12% in 12 months, on average, when stocks and bonds fell by a similar magnitude to this week. So, slower gains, yes, but not the end of the bull market.

Headline news bitchez!

The dollar snapped a six week losing streak (BBDXY snapped a seven week skid):


BofAML tried to tell you last week:


And they told you again on Friday, but it was too late:


Guess what? No safe haven diversification soup for you!


Junk is cracking as HYG fell to its lowest since March. U.S. HY funds suffered outflows of $1.75 billion in the week ended Wednesday after seeing $1.13 billion of withdrawals in the previous week (Lipper data).


Jeff summed it up:

And here’s our homegirl Dani Burger:

This was the worst week for German equities since February 2016:


The Euro Stoxx 50 is in trouble, falling through its 200-DMA just a day after breaching its 50-DMA:


The EM ETF just had its worst week since January of 2016 (think: higher DM rates):


EM FX posted its largest drop since May 2017.

It was a brutal week in China:


And finally, there was no relief to be found in the cryptoverse where an avalanche of bad news led everything sharply lower on the week a furious Friday bounce notwithstanding:


Good luck Mr. Powell…




4 comments on “There’s Too Much To Lose!

  1. Journeyman

    Eek barba durkle… Somebody’s gonna get laid in college.

  2. Dani Burger?? Is that an endorsement? Forget Gundlac. And remember a single employment stat. like that should be partitioned into pay ranges and structurally dissected.

  3. Seriously? You close with Janet Yellen??

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