“Panic In The Air” – Stunned Traders Speechless At The Carnage

CNN’s Fear & Greed Index just hit 5… an all-time record low (most extreme fear)…

And the following provides a simple analogy for what happens when one market snaps…

Tough week in China…

European stocks had an ugly week…

And, if this holds up next week, will be the worst year for EU stocks since 2008…

But since the trade war truce, US equities have dramatically underperformed…

It was a total shitshow in US equities – Dow, S&P, Trannies down around 6% on the week, and Nasdaq and Small Caps down a shocking 8% or so…

Not decoupled from the rest of the world after all…

Worst week for Dow, Nasdaq since Oct 2008 (5th week lower in last 6)

  • Worst week for S&P since Aug 2011 (5th week lower in last 6)

Just 300 more points lower in the S&P to catch down to financial conditions fair value…

  • Worst week for Russell 2000 since Sept 2011 (5th week lower in last 6)

From the 52-week highs:

  • Dow -16%

  • S&P -17%

  • Nasdaq 100 -21% – BEAR

  • Nasdaq Composite -22% – BEAR

  • Trannies -23.6% – BEAR

  • Small Caps -26% – BEAR

First it was the Russell 2000. Then the Nasdaq Composite. Today it’s the Nasdaq-100 that crossed a bear-market threshold by retreating 20% from a peak. The index’s record was set Aug. 29, the same day as the broader Nasdaq index.

Why today? Blame the FAANG stocks. Facebook, Amazon.com, Apple, Netflix and Google/Alphabet together account for more than two-thirds of the Nasdaq-100’s loss.

Since The Fed, Gold, the dollar, and the long-bond are all up around 0.5%, while stocks collapsed around 6%…

Year-to-Date it’s carnage with Trannies and Small Caps down 16%, Dow and S&P down 10%, and Nasdaq Composite down 8%!!

On the day, we can see where Fed’s Williams tried desperately to jawbone markets higher – but ended up admitting that the balance sheet runoff is on auto-pilot…

and then Navarro comments into the bell did not help…

Bank stocks were a bloodbath – with Regionals have dumped the entire Trump Bump…

Goldman Sachs was a disaster – down over 5% today alone (down 42% from highs)…

VIX term structure remains inverted and spot VIX topped 31 for the first time since Feb today…

Under the covers, there are some extremes:

Put/Call (Open Interest) has collapsed…

Nasdaq/NYSE New Lows is soaring…

Which, as Bloomberg reports, is ominous at best. Since 1984, there were only eight days when a bigger proportion of shares did so, according to Sundial Capital Research. Two of them were in 1987 — during the famous Black Monday crash, when the Dow Jones Industrial Average lost 23 percent in one day, and then again during the following session. The rest were in the aftermath of the collapse of Lehman Brothers in October and November 2008.

There are more than hints of panic in the air,” Jason Goepfert, president of Sundial Capital Research, wrote in a note Thursday.

There is clear evidence of wholesale selling on a level we rarely see.”

And finally, the regime has changed dramatically with a mass exodus of smart money flows…

None of this was helped the largest market cap company in the world suffering a death cross…

Credit markets were a bloodbath this week with loans collapsing bidless…

And HY spreads exploding…

Bonds & Stocks were dumped the last two days…

Treasury yields ended the week notably lower (though not as much as one would expect given the carnage in stocks, since we suspect some forced selling by Risk-Parity funds took some of the buying away)…

10Y Yields closed below the key 2.80% level…

And if cyclical stocks (relative to defensives) are right, Treasury yields have a long way to fall…

The Dollar Index slipped on the week, but the last three days (post Powell) have been chaotic…

Cryptos drifted lower today but had a huge week…Bitcoin’s best week since Feb

Gold and Silver managed gains on the week but copper and even more so crude were clubbed like baby seals…

Gold pushed up to its 200DMA…

Silver underperformed gold…

WTI Crude tumbled to a $45 handle today…

* * *

Finally, we note the surge in USA Sovereign credit risk as the government heads for shutdown (and debt ceiling debacles)…

On the macro side, things are not awesome…

But it’s not just the sovereign that is in trouble…

The profits recession’s already here. The GDP data showed that National Accounts earnings after-tax and w/ IVA & CCA are up 19.6% YoY as of Q3. Strip out these goodies and pre-tax profits are -0.3%. My advice is to fade the cheerleaders that populate the segments on bubblevision.

— David Rosenberg (@EconguyRosie) December 21, 2018

Still… the worst December since The Great Depression – probably nothing, right?

Actually, there are over $17 trillion reasons to worry!!

Who could have seen that coming?

We give the final word to none other than Dennis Gartman who said this morning – “Stock prices continue to plunge and there is nothing else that one can say other than that… the internals remain manifestly, harshly, overwhelmingly, one sidedly, shockingly, dismayingly, margin call-creatingly bearish”