Showing posts with label usa. Show all posts
Showing posts with label usa. Show all posts

Saturday, October 13, 2018

Wall street crash: investors dumping both stocks and dollars

Wall street crash: investors dumping both stocks and dollars

The us stock market has lost its strength. The collapse, which for several months experts predict, finally happened.

The indices suffered the strongest losses since February this year, having collapsed by more than 3%. Former leaders-technology giants-are now among the outsiders.

So, Apple fell by 3.6%, Google also by 3.6%, Amazon lost more than 6%, Facebook - about 4%, and Netflix collapsed by almost 9%.

As a result, the Nasdaq technology index fell by more than 4%, and this fall was the worst since June 2016.

Just a couple of days ago we wrote that all the conditions for the collapse have developed and it will be almost impossible to avoid it. It's only a matter of time.

Following the us stocks fell and other assets, in particular oil from $ 85 fell immediately to the area of $ 82 per barrel. Got and the Russian stock market, although he did not have time to absorb all the negative. Thus, Gazprom lost almost 3.5%, LUKOIL - 1.5%, Sberbank-about a percent.

Note a very interesting point - the fall in the us stock market is not accompanied by the usual for such cases, the strengthening of the dollar. And on the eve of treasuries were under pressure. The dollar at the end of the day fell to the basket of major currencies, that is, the capital from the stock market goes not to the protective assets, as treasuries, and investors generally prefer to get rid of dollars.

Theoretically, this description of what is happening is very generally suitable, but not so simple. First, we note that the yield of treasuries began to decline and it happened just before the closing, and today it continued.

That is, there is a demand for protective assets in the form of bonds, and these bonds are denominated in dollars.

Then how to explain the fall of the dollar, which today in the Asian session intensified amid the ongoing collapse of futures on us indices.

Perhaps we really see the collapse of the us market together with the collapse of the dollar, but we can not exclude that this is just a temporary manipulation of major players who are not the first time turning such a trick.

In September, for example, we have seen do not quite understand the weakening of the dollar, and then in the end quotes of the pair EUR/USD still went down. So it was at the beginning of this year, although then on the stock market about the fall was not yet out of the question.

In General, the collapse seems to have just begun, and its scale will be enormous. The main intrigue is how the dollar will behave. Given the increased geopolitical tensions, we may even witness the end of the era of domination of the us currency.

American stock market-started or "wolves, wolves"?

American stock market-started or "wolves, wolves"?

American stock market-started or "wolves, wolves"?

It is, of course, about the American stock market. "The market pumped up with steroids" is a definition in relation to the S&P500 I have heard especially often in 2012-2014. Since then, the index has grown more than a half times, and the voices of skeptics gradually dissolved in the news noise. When at the beginning of the year the index simultaneously fell 10%, these voices, like, again became audible, however, uncertain. This was followed by a promotion, and skeptics were out of work.

What is the difference between the fall of October? It is the attitude of market participants. When us stocks were adjusted at the beginning and middle of this decade, most participants saw signs of a new fall, similar to 2007-2008. But the fall did not happen. The last 2-3 years the correction was perceived already with no apparent panic, but nervously. And the fall of this week, and it is -7% (!), perceived already quietly, they say, turn down early. That and understandable, too often caution been bailed out deceived. Like in the parable about the boy who screamed, " wolves, wolves." The sheep weren't saved then.

I will not go into details about the set of reasons for this fall: the market is critically expensive, the growth cycle has been delayed for 10 years, and the market itself has grown very well, money rates are rising. The main thing – the growth cycle itself, for these reasons and because of the emotional situation of the market (few people expect a deep correction or reversal of the market down) has exhausted its potential.

This means that the potential of exchange energy has moved to the already ongoing and future sales. And then the current -7% is the beginning. Stock market-a complex system, not balanced, and therefore dramatically changing the paradigm of its behavior. The paradigm of the last 2-3 years is relatively slow growth. The most likely way out of it, as we can assume – a fairly rapid decline in prices. On him and do rate. Not local. With the groundwork months or even years to come. 1 500 – 2 000 p. for S & P500 – more sensible assessment, than current 2 728.