Quick! Somebody buy some iPhones!
Monday was an absolutely miserable day for Tech on Wall Street and it came on the one-week anniversary of what we deemed “A Nightmare on the Nasdaq“. Just call this “a new nightmare.”
It was just seven days ago when the Nasdaq 100 logged its third session of >3% losses since October 9. On Monday, we added a fourth.
Things got off on the wrong foot thanks to renewed trade jitters on the heels of an APEC summit gone horribly awry and, importantly, confirmation from The Wall Street Journal that Apple has indeed cut production orders for all three of the new iPhone models.
As noted earlier, the FANG+ index is on track for its third straight month of losses and on Monday, big cap Tech underperformed the S&P by one of the widest margins since 2009.
A corollary to that is obviously underperformance in Growth and by God, we got some on Monday. The Growth ETF underperformed its Value counterpart by a country mile – this was easily the widest margin of underperformance of the entire bull market.
Remember, “Long FAANG+BAT” is still the most crowded trade on the planet according to BofAML’s closely-watched Global Fund Manager survey. Despite the October rout, that trade topped the list for the 10th consecutive month, although conviction around that assessment is now the lowest since February.
In his year-ahead outlook, BofAML’s Michael Hartnett is “Long BRIC, short FAANG [as a] play on value outperforming growth” and as Nomura’s Charlie McElligott wrote on Monday, “it is never a linear path, but the shift to a much more ‘balanced’ Fed tone last week dictates a repricing of hawkish positioning, while markets ‘pull-forward’ the end of the normalization cycle [which] means USD lower, Curve steeper and Value/Quality over Growth/Momentum in Equities.”
Speaking of Momentum, Monday was among the worst days in history for the ETF, which you might recall suffered its worst drawdown on record during the flash-crashing madness that unfolded on October 10.
Meanwhile, the rout in semis shows no signs of abating. The SOX plunged on Monday and is now on track to log an eighth weekly loss in nine.
Oh, and as for Nvidia, Friday’s rout did not let up. The shares dove 12% to start the week and have now lost half their value since early October. Have a look at this:
This would be a really good time for someone in the Trump administration to float a trial balloon about the possibility of a trade truce at the G20.