Tag: Market Update

After The Perfect Storm, How’s The Market Wreckage, And What’s Next?

This is our weekly market update, where we start in the US, go across to Europe and Asia and end in Australia, covering commodities and crypto on the way. And which ever way you look at the past week, it was a volatile perfect storm driven by weird US jobs data, Middle East tensions, and Japan’s policy shift which together managed to ignite global market chaos. Ahead, I think traders need prepare for an extended period of uncertainty and volatility.

They continue to swing from one side of the deck to the other, as Investors over-reacted swiftly and decisively, dumping stocks in a classic risk-off maneuver, from a far weaker-than-expected Nonfarm Payrolls (NFP) report but then ran back, on slightly stronger data a week later. Many economists reckon the reaction to the data was overblown given the numbers may be skewed by immigration and Hurricane Beryl and better-than-expected jobless claims data on Thursday also supported that view, sending stocks rallying.

The market panic that began in the U.S. quickly spread to Asia, with Japan bearing the brunt of the sell-off. The Nikkei 225, Japan’s benchmark stock index, suffered its most catastrophic decline since the infamous Black Monday of 1987, plunging by a staggering 12% within just six hours. The Japanese yen surged in value by over 10% in less than a month, triggering stop orders and forcing numerous macro hedge funds to liquidate their long USD/JPY positions. Thus, the unwinding of the yen carry trade triggered a vicious cycle of selling pressure, which spread into other markets. But then we got a pull back from the BOJ on potential rate hikes and on Tuesday, S&P 500, Nikkei 225 and bitcoin reversed to the upside and a sense of normalcy started to returned to the markets.

The VIX, which had traded roughly between 12 and 20 for most of the year until last Friday, surged to above 65 — a level associated with outright investor panic (but note the VIX futures did not), and commentators like former Treasury Secretary Lawrence Summers suggests there are technical issues with the VIX, “My understanding is that because there are some illiquid instruments that go into the calculation of the VIX, the VIX had a somewhat artificial move on Monday,” Summers told Bloomberg. “Since that is so widely watched an indicator, issues of liquidity, issues around how it settles, I think should be studied by the relevant parties in the industry and the regulator — the SEC.” The VIX closed down 14.4 per cent to 20.37 in Chicago on Friday.

Investors also await next week’s readings on U.S. consumer prices and retail sales for July, which could provide fresh evidence on the chances of a soft landing for the American economy.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
After The Perfect Storm, How’s The Market Wreckage, And What’s Next?
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After The Perfect Storm, How’s The Market Wreckage, And What’s Next?

This is our weekly market update, where we start in the US, go across to Europe and Asia and end in Australia, covering commodities and crypto on the way. And which ever way you look at the past week, it was a volatile perfect storm driven by weird US jobs data, Middle East tensions, and Japan’s policy shift which together managed to ignite global market chaos. Ahead, I think traders need prepare for an extended period of uncertainty and volatility.

They continue to swing from one side of the deck to the other, as Investors over-reacted swiftly and decisively, dumping stocks in a classic risk-off maneuver, from a far weaker-than-expected Nonfarm Payrolls (NFP) report but then ran back, on slightly stronger data a week later. Many economists reckon the reaction to the data was overblown given the numbers may be skewed by immigration and Hurricane Beryl and better-than-expected jobless claims data on Thursday also supported that view, sending stocks rallying.

The market panic that began in the U.S. quickly spread to Asia, with Japan bearing the brunt of the sell-off. The Nikkei 225, Japan’s benchmark stock index, suffered its most catastrophic decline since the infamous Black Monday of 1987, plunging by a staggering 12% within just six hours. The Japanese yen surged in value by over 10% in less than a month, triggering stop orders and forcing numerous macro hedge funds to liquidate their long USD/JPY positions. Thus, the unwinding of the yen carry trade triggered a vicious cycle of selling pressure, which spread into other markets. But then we got a pull back from the BOJ on potential rate hikes and on Tuesday, S&P 500, Nikkei 225 and bitcoin reversed to the upside and a sense of normalcy started to returned to the markets.

The VIX, which had traded roughly between 12 and 20 for most of the year until last Friday, surged to above 65 — a level associated with outright investor panic (but note the VIX futures did not), and commentators like former Treasury Secretary Lawrence Summers suggests there are technical issues with the VIX, “My understanding is that because there are some illiquid instruments that go into the calculation of the VIX, the VIX had a somewhat artificial move on Monday,” Summers told Bloomberg. “Since that is so widely watched an indicator, issues of liquidity, issues around how it settles, I think should be studied by the relevant parties in the industry and the regulator — the SEC.” The VIX closed down 14.4 per cent to 20.37 in Chicago on Friday.

Investors also await next week’s readings on U.S. consumer prices and retail sales for July, which could provide fresh evidence on the chances of a soft landing for the American economy.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

DFA Live Q&A HD Replay: Investing Now: With Damien Klassen

This is an edited version of a live discussion with Head of Investments at Walk The World Funds and Nucleus Wealth, Damien Klassen as we dive into the current market chaos and explore what is really going on. Is this a replay of the DotCom bubble, or a minor glitch, and where will the markets pivot to next?

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Investing Now: With Damien Klassen
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Is This Time Really Different, As Equities Fall Hard?

We are now deep into uncertain territory, as the thesis “this time is different” is being tested by reality, and for now, reality is winning. Investors are running from one side of the boat (hopefully not the titanic), to the other, as a fear of recession iceberg looms for investors still leveraged to the gunnels in AI tech, are hopelessly wrongly positioned for such an event.

I can show you thousands of reports claiming this time is different – plenty suggesting the long inverted bond yield curve had lost its power to predict a recession; plenty arguing extreme share market concentration was no big worry; plenty arguing that the mini bubble in artificial intelligence was nothing like what we saw in the DotCom era. But now, (as expected), all those beliefs are being challenged by a perfect storm of market fears. Even though talk of broad recession still seems far-fetched, with real-time U.S. GDP estimates still tracking growth of 2.5%, fears of a negative pulse through the industrial world from a stuttering Chinese economy have been building for weeks.

A series of ugly data points also inflamed investors’ recession fears. There was the weaker than expected data on job openings and a manufacturing activity gauge that showed US factories are going backwards with data showed U.S. manufacturing activity contracted at the fastest pace in eight months in July. And then US non-farm payroll data showed the US economy added 114,000 jobs in July, compared to expectations for 170,000 jobs, while the unemployment rate rose from 4.1 per cent to 4.3 per cent. Did Hurricane Beryl, which knocked out power in Texas and slammed parts of Louisiana during the payrolls survey week, contributed to the below-expectations payrolls gain? Notably, June’s labour market data was also revised down; downward revisions have now occurred six out of the last seven months. We are close to a possible triggering of the so-called ‘Sahm rule’ that maps the pace of a rising U.S. jobless rate against the onset of recession.

And this to me could be said of the broader markets too, hard to read from here – the likelihood of more declines and rotations from big tech are there, at least until NVidia’s next update, while markets might now have swung too far towards recession fears (remember traders make money from volatility). A very interesting time heading into the next RBA meeting… and a continue to believe markets will slide into September. Perhaps now the FED PUT is in play, again..

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Is This Time Really Different, As Equities Fall Hard?
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Is This Time Really Different, As Equities Fall Hard?

We are now deep into uncertain territory, as the thesis “this time is different” is being tested by reality, and for now, reality is winning. Investors are running from one side of the boat (hopefully not the titanic), to the other, as a fear of recession iceberg looms for investors still leveraged to the gunnels in AI tech, are hopelessly wrongly positioned for such an event.

I can show you thousands of reports claiming this time is different – plenty suggesting the long inverted bond yield curve had lost its power to predict a recession; plenty arguing extreme share market concentration was no big worry; plenty arguing that the mini bubble in artificial intelligence was nothing like what we saw in the DotCom era. But now, (as expected), all those beliefs are being challenged by a perfect storm of market fears. Even though talk of broad recession still seems far-fetched, with real-time U.S. GDP estimates still tracking growth of 2.5%, fears of a negative pulse through the industrial world from a stuttering Chinese economy have been building for weeks.

A series of ugly data points also inflamed investors’ recession fears. There was the weaker than expected data on job openings and a manufacturing activity gauge that showed US factories are going backwards with data showed U.S. manufacturing activity contracted at the fastest pace in eight months in July. And then US non-farm payroll data showed the US economy added 114,000 jobs in July, compared to expectations for 170,000 jobs, while the unemployment rate rose from 4.1 per cent to 4.3 per cent. Did Hurricane Beryl, which knocked out power in Texas and slammed parts of Louisiana during the payrolls survey week, contributed to the below-expectations payrolls gain? Notably, June’s labour market data was also revised down; downward revisions have now occurred six out of the last seven months. We are close to a possible triggering of the so-called ‘Sahm rule’ that maps the pace of a rising U.S. jobless rate against the onset of recession.

And this to me could be said of the broader markets too, hard to read from here – the likelihood of more declines and rotations from big tech are there, at least until NVidia’s next update, while markets might now have swung too far towards recession fears (remember traders make money from volatility). A very interesting time heading into the next RBA meeting… and a continue to believe markets will slide into September. Perhaps now the FED PUT is in play, again..

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Remember Folks, Buy Low, Sell High – Especially Now!

This is our latest weekly market update, where we check in the markets across the USA, Europe Asia and Australia and also cover commodities and crypto.

This past week once again was full of swings, up earlier, then down, and then an upswing on Friday, though still to end lower once again across the week. It is worth recalling that to make money in stocks the idea is to buy low, and sell high. In recent times we saw investors piling into already over expensive tech stocks – essentially buying high and hoping for higher. Some of that is now reversing. And there is probably more to come.

The US markets did get a boost at the end of a wild week after key economic data bolstered speculation the Federal Reserve will set up the stage for a rate cut in September as the volatility index slide 11 per cent from recent highs.
While every major group in the S&P 500 rose on bets that the start of the Fed easing cycle will keep fuelling the outlook for Corporate America, once again, smaller firms largely beat the cohort of tech megacaps — extending their July surge to about 10 per cent.

The S&P 500 CLOSED 1.11% higher, the DOW was up 1.64% and the NASDAQ rose 1.03 per. The Russell 2000 of small caps climbed 1.65 per cent, while the gauge of the “Magnificent Seven” megacaps added just 0.7 per cent. The S&P Financials were up 1.49%.

The Australian dollar fell in its longest stretch of losses in almost a year as concerns about China’s economic recovery continue to weigh on the currency and commodity prices. The Aussie – which had been rallying on the interest rate differentials between Australia and the US – has not been immune to the latest sell-off in metals prices. It was last at 65.49. But AMP’s chief economist Shane Oliver is also sticking by his forecast, projecting the Aussie to reach US70¢ by the end of the year.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Remember Folks, Buy Low, Sell High – Especially Now!
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Remember Folks, Buy Low, Sell High – Especially Now!

This is our latest weekly market update, where we check in the markets across the USA, Europe Asia and Australia and also cover commodities and crypto.

This past week once again was full of swings, up earlier, then down, and then an upswing on Friday, though still to end lower once again across the week. It is worth recalling that to make money in stocks the idea is to buy low, and sell high. In recent times we saw investors piling into already over expensive tech stocks – essentially buying high and hoping for higher. Some of that is now reversing. And there is probably more to come.

The US markets did get a boost at the end of a wild week after key economic data bolstered speculation the Federal Reserve will set up the stage for a rate cut in September as the volatility index slide 11 per cent from recent highs.
While every major group in the S&P 500 rose on bets that the start of the Fed easing cycle will keep fuelling the outlook for Corporate America, once again, smaller firms largely beat the cohort of tech megacaps — extending their July surge to about 10 per cent.

The S&P 500 CLOSED 1.11% higher, the DOW was up 1.64% and the NASDAQ rose 1.03 per. The Russell 2000 of small caps climbed 1.65 per cent, while the gauge of the “Magnificent Seven” megacaps added just 0.7 per cent. The S&P Financials were up 1.49%.

The Australian dollar fell in its longest stretch of losses in almost a year as concerns about China’s economic recovery continue to weigh on the currency and commodity prices. The Aussie – which had been rallying on the interest rate differentials between Australia and the US – has not been immune to the latest sell-off in metals prices. It was last at 65.49. But AMP’s chief economist Shane Oliver is also sticking by his forecast, projecting the Aussie to reach US70¢ by the end of the year.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Buckle Up; The Markets Just Got Interesting!

Markets Are Clearly Confused. The S&P 500 closed sharply lower on Wednesday, suffering its biggest one day lost since 2022 as tech stocks nosedived following underwhelming second-quarter earnings from heavyweights Alphabet and Tesla.

After the recent political machinations in America, with Trump in the ascendency, followed by the switch from Biden to Harris, the Trump trade got reversed. In Big Tech, the rotation from AI stocks has continued, as players like Google reportedly are spending even more Capax than expected investing in AI, without a clear uptick in revenue, while Tesla pushed out some of their new business plans, while reporting weaker sales revenue.

Then we have the prospect of US rate cuts now emerging in September, having at the start of the year priced in up to six cuts, a month ago considering a rise as inflation appeared more sticky, but now economic cracks may suggest a series of cuts soon.

And in China, data continues to be weak, after the recent conflab there did little to clarify Government support for the weak economy, with speculation rise that they will wait for the US election result.

And while rate cuts continued in Canada yesterday, and are expected in Europe, and the UK, in appears rate rises are more likely in Japan and Australia.

Finally, we have the normal summer thinner volumes, and then the prospect of the typically wobbly markets we often see in September and October, before a run up towards the end of the year.

So traders are going cautious, taking money off the table, and into safe havens, switching from the high tech bet, and watching for the next moves.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Buckle Up; The Markets Just Got Interesting!
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Buckle Up; The Markets Just Got Interesting!

Markets Are Clearly Confused. The S&P 500 closed sharply lower on Wednesday, suffering its biggest one day lost since 2022 as tech stocks nosedived following underwhelming second-quarter earnings from heavyweights Alphabet and Tesla.

After the recent political machinations in America, with Trump in the ascendency, followed by the switch from Biden to Harris, the Trump trade got reversed. In Big Tech, the rotation from AI stocks has continued, as players like Google reportedly are spending even more Capax than expected investing in AI, without a clear uptick in revenue, while Tesla pushed out some of their new business plans, while reporting weaker sales revenue.

Then we have the prospect of US rate cuts now emerging in September, having at the start of the year priced in up to six cuts, a month ago considering a rise as inflation appeared more sticky, but now economic cracks may suggest a series of cuts soon.

And in China, data continues to be weak, after the recent conflab there did little to clarify Government support for the weak economy, with speculation rise that they will wait for the US election result.

And while rate cuts continued in Canada yesterday, and are expected in Europe, and the UK, in appears rate rises are more likely in Japan and Australia.

Finally, we have the normal summer thinner volumes, and then the prospect of the typically wobbly markets we often see in September and October, before a run up towards the end of the year.

So traders are going cautious, taking money off the table, and into safe havens, switching from the high tech bet, and watching for the next moves.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Just The Start As Markets Are Rocked By Rotations, BSOD, Politics, And More…

In our latest weekly market update, we start in the US, move to Europe and Asia and end in Australia as well as covering commodities and crypto, as a way of digesting all that has happened this past few days.

This past week, was again packed full of contradictory signals, with World stock indexes falling on Friday as a global cyber outage rattled investors by disrupting operations across multiple industries, while the dollar climbed alongside Treasury yields. All three US indices fell, as the S&P 500 and Nasdaq registered their biggest weekly percentage declines since April. while Gold briefly traded below $US2400 an ounce, oil fell 3 per cent to trade below $US83 a barrel and iron ore slid 1 per cent, while the second quarter earnings season is off to a mixed start.

A growing number of analysts and strategists are telling clients there is fragility among the stock giants having touched highs recently. Now the dilemma for investors is after 10 months of a big rally, should investors stick with their big winners or change tack remembering that history says wealth is created by a tiny number of companies, and most stocks will make investors poorer.

The market is overbought but analysts are split on whether the strong breadth improvements will be bullish for stocks moving forward or a rotation away from technology where most of the growth has been means markets will fall.

As with global stocks, concentration in the Asia-Pacific region is at 35-year highs, and CBA (which has been the fourth-largest contributor to returns in the region in the past 20 years, on BofA’s numbers) has been a prime mover; it is one of just eight stocks that have delivered 80 per cent of the gains in the MSCI Asia Pacific (excluding Japan) index this year.

There will be more madness ahead!!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Just The Start As Markets Are Rocked By Rotations, BSOD, Politics, And More…
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