Circuit Breakers Trigger Again
For the second time in three days, Stock Market Volatility Triggers Kicked In.
An exchange-mandated circuit breaker halted trading for 15 minutes for the second time in three days after the S&P 500 fell 7% from its Tuesday close.
Trading will pause again if the index drops 13% during Wednesday’s session — a drop of that magnitude would bring the S&P to 2,200.39. A 20% intra-day drop would see markets close for the remainder of the session.
Markets are trading again but the circuit breakers failed to stop the decline.
The DOW is down over 2000 points (9.4%) with the S&P 500 down 190 points (7.8%). The Nasdaq is down 533 points (7.2%).
You cannot blame Trump for the coronavirus unless you believe in conspiracy theories, but you can blame his handling of it and his arrogant Tweets in general.
Mike “Mish” Shedlock
Housing interest rates were @ 9 & 1/2 pts to buy 1978. I bought a home. & Then paid 9 1/2 + 1/4 then @ 9 3/4. I only wish my payments were that low now, compared to my apartment rent. I’m paying approx. $500 more a month now in appt, & it would have been paid off by now, but, everybody was in a hurry for me to sell as the “market for a husband” was slim to none, since, my age group was killed in the Vietnam war! Very difficult to keep up, a two story house. Family feud wasn’t even close to the death threats I got for trying to sell it, & then after. They should have found me a true blue! That’s all I can say .
Any guesses as to where this ends for the DOW or S&P? Stocks where highly overvalued before this, and maybe they are closer to fair value, but it will likely end up overshooting to the downside as well, so i think we need to go down much more as everyone realizes that the big “D” is unavoidable. Just a few days ago some where thinking a recession was avoidable, and I thought that was laughable, but i didn’t think about a 20% drop in US economic activity, but now I think maybe that is possible. I can work from home, but my son lost his restaurant job, my brother in-law works in a band, and I figured any gigs he had recently are gone, but he said people are cancelling wedding gigs in AUGUST. I don’t think we get V recovery, because this snowballs medically and financially. We are stuck at home for 2 months at least because too many people are not staying home and we will be experiencing what Italy is in 2 weeks. 10x the cases and deaths we have now. That maybe will cause the bottom, 1200 to 1600 on the S&P? I know that is a big range but we know things will get much worse, but my confidence level is low right now as too how bad it will eventually get. No one i know has experienced anything like this before.
The USD is king and swinging it’s mighty hammer. The metals and mining stocks suffered another bloodbath on their trip to hell.
Unfortunately@lol is finally right, this is the Great Reset. All measures of wealth cutting in half … as a start.
Nice weather here, though.
Mortgage rates.
Looking at Mortgage Daily News. Average fixed rate 30 yr mortgage. 52 week range 3.13% to 4.40%. Todays rate (set yesterday) 4.13% … following a 68 bps jump! Yesterday 3.45%. More ugliness on tap when updated after 4pm est.
So here is the deal…. We all need to remember the malaise that the country was in with Obama. Hillary was a HORRIBLE candidate (and person) and we can only imagine what a mess todays life would be with her at the helm….with 2 or 3 supreme court picks no less.
I have to agree, Trump is a narcissist and megalomaniac. You kind of have to be to think you can be president….but he clearly took it to another level. At the time, we (the country) wanted to shake up the system….and boy did we. My thought on this whole CV19 deal….. If Trump would have come out right away, and explained how bad this could get….people would have rioted, and many may have been killed needlessly. I view this as a “boil the frog” strategy….which IMO, is probably best. Every day come out with a little more bad news, then a little more, etc….so it will be bad, but at least the country is basically primed for this.
As for the monetary system…..if this helicopter drop of $1-2K a month doesnt show how worthless the fed and this system is, we dont deserve to be in a capitalist country. Speaking of, I am going to write my senators and request that ANY company that borrowed or issued debt for a stock buyback in the last 7 years (or whatever) should NOT get a bailout. I mean really…..Boeing, who screwed the pooch with the 737MAX, AND issued $100B to buy back stock, wants a $60M bailout. Oh HELL no! Let them go BK, sell the company at auction, and clear this debt mountain out once and for all. This is going to be ugly, but I think the debtberg is more of a threat to our long term survival than CV19.
And really, what ever happened to keep a cash reserve (for individuals and business) in CASE there is an unexpected emergency like this? I know, lets hand out cash to the irresponsible and screw everyone. Nice
“Speaking of, I am going to write my senators and request that ANY company that borrowed or issued debt for a stock buyback in the last 7 years (or whatever) should NOT get a bailout. “
Include any which paid a dividend, a bonus to executives and all the rest.
No company, period, should get a bailout. Ever. Under any circumstance, come what may.
Simply speed up BK, grab the assets, sell them at an auction tomorrow, distribute whatever you get to debt holders then zero the debt.
Or at the latest, sell them once the pandemic recedes. While deploying them for pandemic fighting in the meantime.
With a company like Boeing, this is what needs to happen.
Company goes into bankruptcy to wipe out existing shareholders, and clear the debt.
Government must take a stake, as noone wants to do business with a bankrupt company whose products have long life, and is reliable for spare parts.
The system is beyond corrupt for this solution.
Thrilled to hear from some capitalist – thought they were a dying breed.
The malaise never went away with Trump’s election, we just had people desperately trying to believe in 4D chess. We have more than ample proof that Trump is another shill for Wall St and the MIC. I don’t blame people for wanting to believe differently in 2016, but demand for this orange flavor of “hope and change” should have dissipated years ago.
I think we can all agree the US hasn’t been capitalist in a while. Some would argue 1913 was the beginning of the end, others 1971. I think the final straw was in the early 1980s when we decided to take on insane debt loads by simultaneously increasing spending and cutting taxes. Hard to believe we didn’t have $1T of debt until 1982, this year’s deficit alone should be more than double that figure.
When you keep triggering circuit breakers, you should unplug some things and move them around… Bonds again are dislocating, with long bonds down hard, something isn’t clean in the world right now.
Stay safe everyone.
Just bought another tank of propane, there were plenty of tanks at my local Walgreens.
Pretending works ……until it doesn’t! Printing trillions and buying well…everything to prop them up and buy time works….until it doesn’t.borrowing trillions to grow govt and create the illusion of growth works…until it doesn’t!
hi Mish, housing next?
REITs are tanking too. Not sure if there are going to be many buyers or sellers for any real estate over the next few months.
Not surprised about REITs for a couple of reasons. A lot of retailers and restaurants that have been forced to close for the hiatus will likely not survive.
And second, there has been an unprecedented experiment in having people work out of the office which, I think, will lead to businesses wondering why they have to have so many people grouped together in order to function, and consequently why they need that expensive real estate.
Yup, the bond market and housing are toast as well. Early signs of this showing. A house is only worth what the next guy will pay for it, and if the lenders don’t receive any cashflows from their existing mortgage bonds, they sure won’t be in any position to invest in new ones. So large swaths of housing will go no-bid, and when the inevitable unlocking of mortgage moratoriums occur, there will be substantial defaults.
I’m thinking an ounce of gold may very well get you an average house.
Right now the publicly visible shock and awe is in the stock market, but the bond market can’t be too far behind.
Blame the Fed (and the Presidents that appointed them) that created such a fragile credit market dependent on constant payments to service the debt. This just didn’t happen overnight Greenspan (Clinton), Berknake (W. and Obama), Yellen (Obama) and Powell (Trump)…their fingerprints (Reserve Chairmen & Presidents) are all over this collapse/meltdown. Sadly, this 35+ years of Monetary mismanagement won’t get the scrutiny it deserves, nor will those policy makers that were complicit in this debacle.
Don’t forget Congress. A lack of leadership from politicians across the spectrum has brought the US to this stage.
Stopping the economy like Ackman is crying about is suicide it will not stop the virus.
DXY > 101
Federal Reserve will need to announce even bigger QE to 1) drive down $US and 2) to lower interest rates on long end of curve. Interest rates soaring are an uppercut to Housing.
When we get economic reports a month or two from now on current numbers they will be horrendous.
Rising yields are now from fear if not getting a return OF investment. In other words: liquidity dried up.
Silver spot tanking and you cannot buy rounds, eagles or maple leafs. No physical supply available. WTF
And IF you can find any bullion coins, the premium will be ugly.
The only way I see a way to capture lower spot is to buy the silver etf but there is no way to take possession plus I think capital gains tax on PM is higher than regular capital gains on stocks.
I checked JM and they have a price of 15 – 16 on them and they have them. They do note a delay on delivery though. Hmmm. We always bought the tubes of 25 sovereign coins and it comes out to a buck over spot price.
I was going to buy a box of 100 last fri, they wanted $3 over spot.
It is a disconnect between the physical price and the paper price. Think what happens in any system where price controls are used to keep the cost artificially low. The underlying product becomes scarce. Rent controls = few apartments for rent. Socialist countries with price controls on food = no food in the grocery stores. The US commodity paper market is a type of artificial price control. Currently the paper price is so low that physical product cannot be purchased at that price.
I also am not ruling out Trump resigning once he sees the handwriting on the wall. He won’t risk losing an election if he has zero chance of winning. The ultimate joke on America would be if Trump fired himself. Don’t it say it can’t happen. Tom Brady left the New England Patriots and coronavirus happen. 6 months ago these predictions would have looked foolish.
Take the rest of the.day off, CO. You’ve earned it.
Taleb et al paper (the only link on point IMO for a ‘everything will be OK’ scenario, https://necsi.edu/review-of-ferguson-et-al-impact-of-non-pharmaceutical-interventions): “The outbreak can be stopped completely with no resurgence as in China, where new cases were down to one yesterday, after excluding imported international travelers that are quarantined” (published March 17, 2020)
Today (March 18, 2020): “China has taken their best shot at stopping it cold, but they continue to report new cases, 39 today…”; or, if believe the site https://www.worldometers.info/coronavirus/ then China has 13 new cases.
So, either (1) China is negligent in stopping infected travelers into China (Taleb thesis), or (2) Covid-19 virus, SARS-CoV-2, is hard to kill, even after several weeks of quarantine.
Choose your priors. If it’s (2), the Covid-19 becomes like the seasonal ‘common cold’ except it kills 33x more people than the seasonal flu. “Shelter-in-Place” and “social distancing” and “quarantine” for a long time, until they find a vaccine?
But my 401k! Sounds lijke t
Sounds like they might make their 2030 population goal after all.
THE MESSAGE OF THE GEORGIA GUIDESTONES
You mean 5bln, don t you ?
Also, unlike “Casual_Observer,” I do not think President Trump will resign. He is essentially a wartime president now, fighting against SARS-Cov-2. He is directly describing himself that way in his press conferences. He has also had several excellent press conferences in a row now.
If he and his team manage to handle the US outbreak better than Italy has, then he will have a lot of support for re-election. There are some potentially helpful therapeutic drug regimens that are being reviewed by the FDA, and I have a hunch at least one of them will be good based on info I have seen online. Trump may be able to brag about how the US did not need all those ventilators he ordered because he and his team did such a great job finding a therapeutic drug. Even if the stock market has not recovered by the election, he will be difficult to beat if that happens.
Another day or so it will reach where it was when he was elected.
Next stop for the indices is the day after Trump was elected. I’ve always maintained Trump is toast if the economy goes south. It is not a matter of if anymore. Coronavirus isn’t his fault but the adversarial trade relationship with China didn’t help matters. China is still to blame for trying to cover up Covid-19 but Trump will also pay the price. I don’t rule out a double digit negative GDP number for 3 quarters. (Q1,Q2 and Q3) going into election day in 2020. The economy will be back on it’s feet in September but the population will be wary of OrangeMan.
Exactly what tardometer are you using to foretell everything’s back to normal in September?
The world is converging on a protocol of medicines that we know help now. Companies started working on a vaccine in mid-January when China released the sequenced DNA of Covid-19 the day after they sequenced it. Everyone is saying we will have to wait until next year for a vaccine but I think one or multiple companies will come out with a trialed vaccine by mid-September. We also have a battery of research already on coronavirus via SARS and MERS (also coronaviruses). It will be a long summer but this is all based on my best guess. The world is not going to end even though at times it may feel like it. 90% of people who get Covid-19 will only have minor symptoms and survive it. They won’t even need a hospital visit. We need to spread out the hospital visits of the other 10% so we can save as many lives as possible until we get Covid-19 on the run. It is going to happen and signs of normal life are going to be visible by early September.
That was my take. First we remove all the foam from the beer mug… poof. Then what is next? Does it back off to 2007 highs? There is going to be a lot of dislocations that are not going to recover so well, especially if COVID 19 recurs on a regular basis.
Oil down almost 25% TODAY.
Unbelievable.
The drop in oil is more of a stimulus for the middle class than anything the government or the FED has done since …. yeah, that long.
I wonder if Obama will take credit for the Dow’s close today?!