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.





Health Care

Real Estate


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

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.

"The Dow dropped over 1,000 points again today." Reminds me of a Bill Murray movie.

xil, Bam_Man, Truthseeker - I wish I could write in a less condescending tone to reach more people, but the facts are the facts, and talking your book is worse. What do you say to a Socialist/Communist/Collectivist that maintains their position, even though it has NEVER worked even once?

I have learned a lot from Mish, as well as others like Sinclair, Rubino, Schiff, Sprott, and other gold bugs and dollar haters. However, when one's biases and beliefs get in the way of the facts and history, it must be exposed. For example, when global investment is 10x the size of global trade, and even more influential than the Fed, why pretend the Fed is all powerful and that setting up an alternative to the SWIFT system is going to doom the dollar? The Invisible Hand (self interest) moves global investment, and until there is another market that's deep and broad enough, there is simply no alternative to the US dollar for the big money to park. A new reserve currency is coming, maybe as soon as 2021, but it won't occur until a RISING dollar blows up all the dollar-based debts around the world.

The gold bugs/dollar-haters keep calling for hyperinflation, mistakenly thinking we are Venezuela or the Weimar Republic, who failed because confidence was lost and they did not have the reserve currency. No one would rightly buy their bonds. The US has not had this problem, but govt corruption, hubris, and the collapse of the rule of law are undermining this advantage.

A global recession is coming because broke govt's will not proactively reform, and thus they will get increasingly agressive going after other people's money. IL is our posterchild - https://www.armstrongeconomics.com/world-news/taxes/illinois-property-values-collapsing-as-taxes-rise/. However, why do people think the safe-haven is govt bonds, when rates are at 5000-yr lows, govt's are insolvent, and they frequently default?

There will be a knee-jerk reaction into bonds, but reality will sink in when the govt bond bubble pops and the sovereign debt contagion spreads. Where will global investment go? In this trend from public to private, equities become a safe-haven. As the demand for govt bonds declines with confidence, rising rates will blow-up the GLOBAL debt bomb from the periphery to the core. This reality is also the driving force behind the development and adoption of a peer-to-peer, encrypted solution that's outside the current flawed and corrupt system. Why would anyone, other than those vested in the old system, not be supportive of cryptos/blockchain?

The most data-based, unbiased source of information, that has an unparalled proven track record, is Armstrong. You ignore him at your peril.

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

Well said Mish.

AND, for other armchair experts in the comments sections...please don't quote traders that got "caught"...

real traders keep their mouth shut and play how the money is moving in whichever direction and whichever market.....real traders make so much money in these moves it would defy your imagination. And they don't chirp about it, they just go home drink 100year old Macallan and let others go into conniptions about the why and hows.....

Those that get caught, aren't traders.


This move so far is nothing more than a test of the S&P 500 200 day moving average. It undercut the 200 DMA by about 6 points (some stop-running) and has now reversed violently to the upside as it almost always does when these levels are tested the 1st time. It might break down in the months ahead (eventually I expect the Fed balance sheet reduction to matter but it is currently only $20 billion / month and that is negated somewhat by interest on reserves) but the market will probably start working its way back up. It will likely be quite choppy at first and could include a slightly lower low but this looks like some type of bottoming area for the time being.

"Everything is correlated. There are no sector hiding spots." Agriculture????? Jim Rogers has mentioned recently investing in the beaten up agriculture sector. An article from Acting Man mentions this and also "DBA". Possibly the only sector not down from January. Not invested in agriculture and in fact unloaded most of my equities early last year. Will have to do further research into the sector to see if it is a possibly buy but wondering if anyone has any opinions and this may possibly a hiding spot to invest?


Playing the volatility is a way to make money. So all those clowns who were 3x short VIX were fleeced. And, if you have colocated computers driving volatility all over the place, and legally are allowed to front run every trade you...could...just shake stock out of weak hands all day long. And then the call from PPT comes in to drive money out of correction. SOMEBODY is making a pile with 10000 point surges and dives in one day. Currency trading as well...

Must "everyone" take "everything" literally. I was discussing the S&P 500 sectors. I listed all of them. One person whined that I left off bitcoin. Guess what? I left off gold as well. And also agriculture and moon rocks. https://us.spindices.com/indices/commodities/sp-gsci-agriculture

I'm sorry but the global cooling legend is pure nonsense. To begin with, a solar minimum has a rather small effect on global temps, up to 0.25 degrees of cooling if even that, while temps are already about 1 degree above the beginning of the 20th century. In addition, the "Little Ice Age" in Europe and North America (and "the year without summer") occurred due to vulcanism, not due to the Maunder minimum. So better to stop spreading this global cooling stuff. Ain't gonna happen.