The headline GDP was 3.5% but the headline number looks much stronger than it really is. A huge inventory adjustment contributing 2.07 percentage points to the headline number. Government spending was also on the high side, contributing 0.56 percentage points.

Stocks Resume Slide

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Tech Worries

The Wall Street Journal reports Tech Worries Slam Stocks.

> A powerful slump in technology and internet stocks spread Friday, putting the S&P 500 in danger of joining the Nasdaq Composite in correction territory as investors continued an October retreat from risky assets.

> U.S. stocks are in the midst of one of their biggest selloffs in years, sparked by worries about the impact of tariffs on U.S. company earnings, as well as whether a slowdown in China and Europe growth could spill over into the U.S. economy. Fast-growing internet and tech firms have been some of the hardest hit stocks during the market turmoil of the past few weeks, with the tech-heavy Nasdaq Composite on track for its worst month since 2008.

> Quarterly sales from and Google parent Alphabet disappointed investors, sending the two tech behemoths’ stocks sharply lower and pushing prices of everything from retail stocks to copper prices lower. This week’s selloff has been characterized by widespread buying and selling, leading to whipsaw trading that has unsettled many investors.

> The S&P 500 fell 2.8%, breaching the 2637.68 level that would put it 10% below its last record and in correction territory for the first time since February’s selloff.


> The Nasdaq Composite slumped 3.6%, erasing Thursday’s rebound and putting it down 12% for the month, and the Dow Jones Industrial Average fell 2.1% to 24456. A close below 24145.55 would put the blue-chip index in correction territory.

Dip Buyers Out Again

In the time it took to write the above and create charts, much of those early equity losses have been clawed back.

The dip buyers are out again. That's a strategy that has not exactly been working this past month.

I don't know where stocks close, nor does anyone else. But at some point, buying the dip is going to be a huge mistake (likely starting this month). Stock are insanely overvalued.

Expect Lost Decade

These declines are just the beginning. For discussion, please see Expect a "Lost Decade", Stock Market Rout "Only Just a Start".

Also consider Eight Reasons a Financial Crisis is Coming.

It's been about 10 years since the last financial crisis. FocusEconomics asked me if another one is due. The short answer is yes.

Click for details.

Mike "Mish" Shedlock

Debate over the Yield Curve: Is it Steepening or Flattening?

A recent Wall Street Journal story stated that “A flattening of the Treasury yield curve in 2017 is a worrying sign for investors banking on resurgent U.S. inflation and growth.”

Yield Curve Gets Serious: 10-Year to 7-Year Treasury Spread Collapses to 4 BPs

JP Morgan is following yield spreads on the GBI broad bond index. Things are getting serious says one analyst in a Tweet

Relentless Yield Curve Flattening

Most economists expect the Fed will hike at least twice more this year. If so, portions of the yield curve may invert.

Hello Treasury Bears: 10-Year Bond Yield Approaching Record Low Yield

Treasury yields are down again today, the 6th straight day of strengthening inversions. 30-year to FF inversion on deck.

Fed Did Nothing, Said Little: VIX Back Below 10, Yield Curve Flattens a Bit, Silver Jumps

The Fed upgraded its assessment of the economy from moderate to solid but held off on further rate hikes. Baby steps will continue in December. The market prices in a 97.7% chance of a quarter point hike next month.

Yield Curve to Completely Flatten in 2018: But How?

The T. Rowe Price Group expects the yield curve to completely flatten in 2018. This is not a surprise as I have been commenting the same way for quite some time. The more important question is how? By yields converging up, down, or a mix?

Flattening Yield Curve in One Picture

The flattening yield curve is a topic of much discussion. The lead chart shows various spreads it in one picture.

Yield Curve Update: 10-Year vs 1-Month Inversion Persists

The yield curve inversion persists and even widened, selectively.

Number of Yield Curve Inversion Points Rises as the Long-Bond Yield Dives

The US Treasury 5-year yield is now inverted with 3, 2, and even the 1-year treasury yield.