Have We Hit The Top?

[gfp]

8 minutes ago, Spooky said:

Anyone know what is driving the big sell-off today?

 

What do the year 2000, the year 2007 and the year 2019 all have in common?

 

 

[Spooky]

4 minutes ago, gfp said:

 

What do the year 2000, the year 2007 and the year 2019 all have in common?

 

 

 

You think this is the start of the collapse of the "super bubble"? Or maybe just the unwinding of the AI euphoria?

[Luke]

17 minutes ago, Spooky said:

Anyone know what is driving the big sell-off today?

Weakening employment, manufacturing and construction data pushed Treasury yields below 4% and reversed earlier gains for stock indexes.

[gfp]

11 minutes ago, gfp said:

 

What do the year 2000, the year 2007 and the year 2019 all have in common?

 

 

 

The beginning of Fed interest rate cuts.  Ain't nothing good happened in my investing lifetime once that happens

[Spooky]

11 minutes ago, gfp said:

 

The beginning of Fed interest rate cuts.  Ain't nothing good happened in my investing lifetime once that happens

 

Sounds like opportunity awaits.

[Gregmal]

29 minutes ago, gfp said:

 

What do the year 2000, the year 2007 and the year 2019 all have in common?

 

 

They were years where the world didn’t end?

[thowed]

Bond yields going down on bad economic data?  Concerns that Fed won't be cutting rates quickly enough.  Think that was it.

[Gregmal]

How bout that inverted yield curve everyone’s been jawboning about for…years…..

[Hoodlum]

Nasdaq was down another 3% after hours, mainly due to Amazon and Intel reporting.  This is just the beginning.  

[Gregmal]

4 minutes ago, Hoodlum said:

Nasdaq was down another 3% after hours, mainly due to Amazon and Intel reporting.  This is just the beginning.  

Got 457.55 quote AH on the QQQs after a 459.66 close. Not sure what youre seeing.

[Gamecock-YT]

7 hours ago, Spooky said:

Anyone know what is driving the big sell-off today?

 

[UK]

12 hours ago, Spooky said:

 

You think this is the start of the collapse of the "super bubble"? Or maybe just the unwinding of the AI euphoria?

 

This seems promising:). I would vote (or would like to see, because of wishful thinking) for an unwinding, but perhaps both things could happen to a degree, who knows? Market is going up non stop, without any meaningful volatility almost for a two years now. Perhaps it would be normal and even healthy for at least some kind of correction size pullback to occur and return of little more fear to the market. I already see quite a lot of headlines about recession and geopolitics, lets wait for a chorus of usual doomsayers to emerge:)

 

Edited August 2 by UK

[UK]

13 hours ago, Gregmal said:

They were years where the world didn’t end?

 

No, but you know: https://www.investing.com/news/stock-market-news/investors-should-sell-stocks-at-first-rate-cut-amid-growing-hard-landing-risks--bofa-432SI-3551431

[Paarslaars]

So stocks went down when we don't get rate cuts because the market expected rate cuts.

Now stocks go down when we will get rate cuts?

It almost seems like there is an entire business making profit by instilling fear in investors... mmm

[mattee2264]

I think it is simply a case of momentum starting to run its course which puts us into more of a sideways market with a lot more volatility. 

 

CNBC do a Mag7 index and at the July peak it was up 3x from the October 22 lows. That is pretty incredible so a correction was inevitable. 

But cloud revenues continue to increase at a rapid clip, there is still an expectation that the AI capex spend will sustain or even increase revenue and earnings growth. No real signs of diminishing enthusiasm for AI capex spend which supports semiconductor valuations especially NVIDIA. And Big Tech seem relatively insulated from the economy. Companies will start cutting staff long before they consider cutting IT spending and if you are struggling to grow revenues then you are going to be very tempted to want to try AI products in the hope it can cut your costs. Not to mention the worry that if you don't do so then a competitor will and be able to undercut you. So there is a defensive aspect to the investments.

 

As for the rest of the economy we are seeing a lot of weakness in consumer stocks and that isn't surprising really. 

 

Financials are probably the next domino to fall. Lower interest rates aren't bullish at all for banks especially to the extent they reflect a worsening economic picture. And the commercial real estate issues are closer and closer on the horizon. And commodities also won't do well if economy weakens.

 

But the market is not the economy. It is 1/3 Big Tech and as I mention above they are secular growers. Aside from a few years of peak stimulus the US economy has been anaemic but it hasn't prevented Big Tech companies from growing at 20% a year. Financials, commodities, consumer stocks are probably only about 1/4 of the index and there will be an offset because in a flight to quality defensive stocks such as utilities, healthcare will do well. 

 

And it is only a matter of time before the next big stimulus whether it comes from US government or the Fed. 

 

[ArminvanBuyout]

There's the whole topic of yen carry trade deleverage. People borrowed yen for US assets, and now that yen has strengthened from 162 to 149, there is degrossing happening

[Gregmal]

I also just think its the news cycle and lack of investment acumen/confidence that leads most to need to have a reason to explain every market gyration. Market had a solid few months, then it pulls back some. Sounds like the stock market being the stock market. Why waste time trying to guess everything?

[UK]

https://www.investing.com/news/stock-market-news/hedge-fund-elliott-says-ai-is-overhyped-nvidia-stock-a-bubble-3552377

[Luke]

Nice to see a little pullback but not getting excited, things still to expensive to make sense to me. 

[Spooky]

2 hours ago, Gregmal said:

I also just think its the news cycle and lack of investment acumen/confidence that leads most to need to have a reason to explain every market gyration. Market had a solid few months, then it pulls back some. Sounds like the stock market being the stock market. Why waste time trying to guess everything?

 

Because its fun. Broadly I agree - who knows why the market does what it does on a daily basis. Stocks go up. Stocks go down. But in the long run they tend to go up.

 

Also, I am trying to understand what is driving sentiment / investor psychology.

[changegonnacome]

Unemployment has ticked up to 4.3%
 

Sahm Rule has officially been tripped 

 

If past is prologue we are likely to see unemployment continue up to somewhere in the mid-5’s with some negative GDP prints adjoining

Fed should get cutting…it’s been a VERY long period of inversion…….which is to say that there is likely months of disinflationary/negative momentum in the tank (long & variable lags)…the last mile is usually a bitch and usually occurs in the context of low interest rates not high ones….plus there’s the rarely discussed phenomenon at the end of hiking cycles and the beginning of cutting cycles….which is folks….knowing that lower rates are inevitable & coming…do one final act of consumption deferral and sit on their hands….knowing that significantly lower interest rates & by extension financing rates will be available to them soon. 

 

Given the exceptionally strong economic base with record low unemployment that has characterized this period ….a ~5.5% unemployment rate is really not something to write home about in the historical record.
 

What makes this period interesting however is the fiscal position…both balance sheet and fiscal deficit….this is not a US government that made hay while the sun shined running surpluses and therefore has saved deficit space for a rainy day….they’re running insane annual budget deficits in a period of record low unemployment. It’s been reckless and the question is whether they get away with it or chicken come home to roost. 

 

 

[Milu]

14 minutes ago, changegonnacome said:

Unemployment has ticked up to 4.3%
 

Sahm Rule has officially been tripped 

 

If past is prologue we are likely to see unemployment continue up to somewhere in the mid-5’s with some negative GDP prints adjoining

Fed should get cutting…it’s been a VERY long period of inversion…….which is to say that there is likely months of disinflationary/negative momentum in the tank (long & variable lags)…the last mile is usually a bitch and usually occurs in the context of low interest rates not high ones….plus there’s the rarely discussed phenomenon at the end of hiking cycles and the beginning of cutting cycles….which is folks….knowing that lower rates are inevitable & coming…do one final act of consumption deferral and sit on their hands….knowing that significantly lower interest rates & by extension financing rates will be available to them soon. 

 

Given the exceptionally strong economic base with record low unemployment that has characterized this period ….a ~5.5% unemployment rate is really not something to write home about in the historical record.
 

What makes this period interesting however is the fiscal position…both balance sheet and fiscal deficit….this is not a US government that made hay while the sun shined running surpluses and therefore has saved deficit space for a rainy day….they’re running insane annual budget deficits in a period of record low unemployment. It’s been reckless and the question is whether they get away with it or chicken come home to roost. 

 

 

Is the Sahm rule the new yield -curve inversion in that it 'guarantees' an upcoming recession. Never heard of it before but now seeing it mentioned all over twitter. I'm always a bit skeptical of these 'rules' but I suppose we'll find out soon.

[changegonnacome]

49 minutes ago, Milu said:

suppose we'll find out soon.

 

Yep we're gonna get the answer pretty soon on the immaculate disinflation/soft landing question.

 

Its still possible......the unprecedented wave of immigration post-COVID (lets call it 'revenge' immigration after revenge travel) has been a big help.....the crazy strong dollar disinflated imported goods.......and the immigration wave helped disinflate domestic labor pressures.

 

As I said, from an economic data perspective, a trip to 5.5% unemployment is kind of nothing burger....in the scheme of things its more a return to the historical average.......3.5% unemployment is the outlier

[Castanza]

Rules are meant to be broken 

[changegonnacome]

46 minutes ago, Castanza said:

Rules are meant to be broken 

 

No doubt about that....never positioned like there is only one outcome possible...market goes up 70% of the time, all the time  thats a very important base rate...ex-ante however you've got to pay some attention to base rates.....like broadly paying a 100 times revenues for a company rarely works out well...or paying 26x times for SPY has poor historical forward returns....