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Another Bloodbath: Sector by Sector Carnage - No Hiding Places

The Dow dropped over 1,000 points again today. Carnage is everywhere. Every S&P 500 sector is in a correction.

Materials

Utilities

Technology

Industrials

Health Care

Real Estate

Financials

S&P 500 All Sectors

No Hiding Places

A correction, defined as a 10% decline from the top, is underway in every sector of the S&P 500. The Industrial sector went into correction three days ago and is just under the 10% threshold today.

Sector by Sector Analysis

  • S&P 500: Down 3.75% today, 10.2% from January high
  • XLB Materials: Down 3.51% today, 10.5% from January high
  • XLU Utilities: Down 1.12% today, 16.1% from November
  • XLK Technology: Down 4.14% today, 10.4% from January high
  • XLI Industrials: Down 3.86% today, 9.8% from January high
  • XLV Health Care: Down 3.47% today, 11.8% from January high
  • XLRE Real Estate: Down 3.13% today, 12.6% from November high
  • XLE Energy: Down 3.02% today, 14.9% from January high
  • XLF Financials: Down 4.40% today, 10.5% from January high

Everything is correlated. There are no sector hiding spots.

This is just a down payment on what's likely ahead.

Mike "Mish" Shedlock

"Everything is correlated. There are no sector hiding spots. This is just a down payment on what's likely ahead."

You conveniently ignored cryptos, which are an asset class, and a very uncorrellated asset class, which is why they are being added by hedge funds. Most cryptos were up today, and some big, like Bitcoin Cash, up over 30%.

You are also misleading readers with your US-centric bias about what's "likely ahead". Where is the big money that's invested around the world going to go when the govt bond bubble pops, and the euro and yen implode? BTW, global investment swamps trade and anything the Fed will do.

The stock market is the only market big enough to absorb the flows, but you continue to stick to your guns, which have been shooting blanks for at least five years. Today, the market backfired and you think your gun went off. In a month stocks and cryptos will be off to the races again, as the rest of the world (periphery), which has a bigger debt problem, implodes ahead of the core (USA).

I hear the recession clock being wound up......

Mish: Thank you for breaking it down by the sector. It is more helpful than you can imagine.

If it’s hard to liquidate, easy to manipulate, takes longer to capitulate.

@Blacklisted, where's your salient analysis for the last five years? i'm sure mish's misled readers would be most interested in your more accurate prognostications.

(edited)

It’s the first correction since the new fiduciary rule has been enacted. If there truly are no “hiding places” then some of these advisers are going to find themselves in hot water.

In the next recession - which you apparently believe will never happen - there will be bankruptcies galore among all these highly leveraged "glamour" stocks and there will be a flight to safety (gold, cash and government bonds) such as the world has never seen. But I'm sure that a genius like you will know exactly when to sell everything and get out unscathed.

Blacklisted you make some very good points in your analysis. In the past I have jumped pretty hard on Mish as we have a different worldview on a number of things. Yet over the years Mish has on occasion criticized himself for underestimating the power of central bankers just for one example. Yet in your remarks your attitude comes across as condescending, even arrogant. As I say you make good points but they loose their effectiveness with your negative demeanor imo.

In the last crisis gold and silver plummeted along with equities. CASH was the best option and not even money market funds were safe.

“If you start to believe that the long end of the curve is going to start to go up, it makes sense that equities would have an adjustment,” Harker says while answering questions from reporters after a speech in New York.

And then New York Fed’s Bill Dudley ventured on to Bloomberg TV to calm the masses, proclaiming that this drop is “small potatoes” and the decline in equity values (has no economic implications.”

This is what probably did the stocks in during the last hour… it looked like the Fed was not going to come riding in with its PPT in tow!

What does it say about the market? It will not take too long for the markets to unravel without the central banksters’ put. And I do not mean only the Fed. If this is the state of the market now with only the Fed acting and that too gingerly, can you imagine what happens if the other central banksters – ECB, BOJ, PBOC and BOE get into the act.

The central banksters have got themselves into a pretty pickle, looks like! But then not to worry, after all they are ATLAS, they can swing it their way when they want to. But then what happens one fine day when they find they can’t!

Right now Bitcoin is under $7000 and has an ugly chart. A few days ago it looked like it might not go under 10,000. BTFD, blacklisted!

A boiling hot January equity market was not enough to prompt even a 25bp hike in rates by the Fed. What WOULD get them to raise rates? Nothing. JulianAssange leaves the Ecuadorian embassy before anybody at the Fed sees any hint of US inflation.
”There are none so blind as they that.... “

Several people seem to think they “know” what’s coming. Personally, I am rarely, if ever that confident. The more I learn and the more I experience, the less confident I am. Having said that, I have been reducing my cash position slightly this week, looking for a few bargains in various markets. I like to buy when things are on sale. But I am not confident enough to make big moves in either direction.

2/9/18=Double Black Friday!

Mish, I love your insights. I've been reading your blogs since '11 - '12. You and Wolf Richter have been sounding the alarms about the dangers of our massive debt binge for years. It's going to be different this time....the difference being a bigger, deeper crash. As bond yields rise, it will be harder for debtors to refinance and then the real story begins. As you stated, there will be no place to hide, and I fear this Stock Market correction could spill into Real Estate. This QE stimulated, low yield Real Estate bubble may be nudged into a Real Estate correction. The correction/crash could be deeper than '08 -'10 because many post-recession SFRs & multi-unit properties were acquired via Wall Street Hedge Funds. The Hedge Funds traded very liquid assets ($) for a very illiquid asset (Real Estate). As they bought blocks of distressed properties all at once, they will need to sell blocks of properties all at once. To get their cash out quickly, Hedge Funds will need to drop prices quickly. This could wreak havoc on local RE estate prices. In '08 - '10, the Federal & State gov. stepped in to slow the foreclosure process, thus slowing the drop in Real Estate prices. I don't see how Governments can use their power this time to stop Hedge Funds and other investors from unloading these properties. I hope I am wrong, but I think all this debt is coming home to roost. The latest Stock Market correction could be the start of it.

I think the market sells off before it is evident in earnings whether or not inflation data is OK

It is possible the stock market has peaked and what we are witnessing qualifies as a "blowoff top." Markets are emotional and just how deep this pullback or correction will become is still unknown. Clearly, many traders have been caught sideways and been dealt a solid blow. History shows that when markets have indeed started a long-expected selloff it is not uncommon to see attitudes towards where to invest turn on a dime. The article below delves into some of the factors playing into current market actions.

I used to seek out Louis Rukeyser at times like these! Now it is Mish. Although Louis was usually reassuring.

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