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Dow Drops To 17-Month Lows As Hope-Filled Dead-Cat-Bounce Dies

The last 2 weeks in markets...

And to all those who took Cramer's advice to buy the dips...

 

Some big moves this week...

  • Dow Industrials lowest weekly close since April 2014
  • Dow Transports lowest weekly close since May 2014
  • S&P 500 lowest weekly close since Oct 2014's Bullard lows
  • Nikkei dumped over 7% this week - worst week since April 2014
  • Utilities collapsed 5.1% this week - worst week since March 2009
  • Financials lowest weekly close since Oct 2014's Bullard lows
  • Biotechs lowest weekly close since Feb 2015
  • Investment Grade Corporate Bond Spreads worst since June 2013
  • Treasury Curve (2s30s) flattened 6bps today - biggest drop in 2 weeks.
  • JPY strengthened 2.4% on week against the USD - strongest week since August 2013 (up 4.5% in 3 weeks) - major carry unwind!
  • AUD plunged 3.5% on week against the USD - worst week since January 2015 and worst 4-weeks since Oct 2014 - China proxy

So before we start, Japan was really ugly...

 

And some context for the US equity index drops...

 

With everything red year-to-date... (and since the end of QE3, only Nasdaq is clinging to the green)

 

A quiet Friday before Labor Day weekend provided no juice for momo ignition and apart from a brief algo-driven pop on payrolls, stocks were a one-way-street lower...until the late-day VIX-smash ramp which closed ugly...

 

And Futures show an ugly night turned even uglier...

 

On the week, evereything is red...

 

Dow Futures give us some context for the last 2 week's moves. Bounce dies at Fib61.8% retracement, breaks through 50% and makes lower high as today tested post Black-Monday lows...

 

FANG is FUBAR... (post FOMC Minutes)

 

Financials continues to get hammered (as investors rushed to the safety of Homebuilders this week!?!) - but the panic-buying in the last hour saved it from being a lot worse...

 

Utilities had their worst week since March 2009..

 

But financials have further to fall to catch up with counterparty risk...

 

Just as we saw lasty Friday, VIX was smashed lower in the last hour... which makes perfect sense given Monday is a holiday and China reopens after 3 days of being closed during extreme moves in EM FX and global equity markets...

 

After some VIX complex shenanigans midweek, SPY continues to coverge down to XIV (though the latter is also being squeezed to lows).

 

Since the FOMC Minutes, gold and the long bond are modest losers and stocks big losers...

 

Investment Grade Credit spreads rose 4bps this week, ending with the widest weekly close since June 2013

 

Thank to today's plunge, Treasury yields ended the week lower after China closed... Note that 2Y is unch today, 10Y -3.5bps, 30Y -4.5bps

 

with a dramatic 6bps 2s30s curve flattening on the day (post-payrolls)

 

The US Dollar ended the week unchanged against the majors... but that hid the stunning moves in JPY (USDJPY dropped 2.4% on the week - its worst since Auguist 2013) and AUD (-3.6% - biggest weekly drop in 8 months, worst 4-week drop in a year)...

 

Commodities on the week were a mixed bag with crude up on the week and copper notably lower overnight to negative. Gold & Silver modestly lower... The 8-10ET period remains insanely volatile...

 

Crude had a wild week as Monday and Tuesday's idiocy and noite today's pump'n'dump after rig counts unexpectedly declined...

 

And finally before everyone points out how crazy the bond yields are relative to stocks etc... and the 'economy' - perhaps it was stocks that were wrong all along!!

 

Charts: Bloomberg

Bonus Chart" "Just one wafer thin 25bps rate hike"

 

 

h/t @RudyHavenstein