2024-09-07 05:35:50 ET
Summary
- The Semiconductor Index - SOX - slumped 12.2%, with the Nasdaq 100 - NDX - down 5.9%.
- Japan's Nikkei 225 Index lost 5.8% this week, South Korea's KOSPI 4.9%, Taiwan's TWSE 3.7%, and China's CSI 300 2.7%.
- The market closed the week pricing a 4.18% policy rate after the Fed's December 18th meeting - down 15 bps this week, implying 115 bps of rate reduction over the next three months (or so).
Nvidia (NVDA) sank 12.6% this week. The Semiconductor Index (SOX) slumped 12.2%, with the Nasdaq 100 (NDX) down 5.9%. The S&P 500 dropped 4.2%. The KBW Bank Index fell 5.5%. The VIX (equities volatility) Index jumped 7.38 to 22.38, the highest close since August 8th (as the index retreated from its August 5th spike). "Stocks Hit by Jobs in Worse Week Since March 2023."
"Risk off" was global. Japan's Nikkei 225 Index lost 5.8% this week, South Korea KOSPI 4.9%, Taiwan's TWSE 3.7%, and China's CSI 300 2.7%. Major equities indices were down 3.7% in France, 3.2% in Germany, and 3.1% in Italy.
"Stocks Trashed as Job Gains Fall Short of Forecasts." The SOX sank 4.5% in Friday trading, with the Nasdaq 100 down 2.7%. The afternoon chatter on Bloomberg Television questioned what in the jobs report might have justified the equities rout.
It's a fluid, complex and extraordinary environment, just as we should expect at such a critical juncture for history's greatest Bubble(s). With the backdrop so confounding, it would be surprising if market pundits, Wall Street strategists and the economic community weren't befuddled.
Let's see if the "financial sphere" and "economy sphere" analytical framework can lift the fog a little. Credit and speculative Bubbles have distinct impacts on the two individual but interconnected spheres. And when we contemplate the current backdrop, it is imperative to remind ourselves of the unprecedented Bubble excess experienced over the past five years. There was the $5 TN of QE commenced in pre-Covid September 2019. There were U.S. short-term rates reduced to zero in March 2020 and held below 1% until May 2022, while the Bank of Japan imposed negative rates for eight years - and were close to zero for 24. Government finance Bubble excess included $9 TN of Treasury issuance over five years.
Analysis that disregards the impact of unprecedented debt growth, monetization, market manipulation, and deeply ingrained speculative dynamics will fail to recognize key cycle inflection points. How was virtually everyone blindsided by developments in September 1929?
The market closed the week pricing a 4.18% policy rate after the Fed's December 18th meeting - down 15 bps this week, implying 115 bps of rate reduction over the next three months (or so)....
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Weekly Commentary: 'D' For Dis-Equipoise
