Stock market today

[paramount]

If money is supposedly flowing out of emerging markets into US equities, why have the US market(s) taken such a big hit this year?

[Coronita]

[quote=paramount]If money is supposedly flowing out of emerging markets into US equities, why have the US market(s) taken such a big hit this year?[/quote]

What big hit? We’re down 5%.. That’s nothing….And furthermore, not everything is getting hit…Look at the companies post earnings that are still trading @ 52 week highs, some even higher…

Also, one word… china….

[CA renter]

[quote=paramount]If money is supposedly flowing out of emerging markets into US equities, why have the US market(s) taken such a big hit this year?[/quote]

When deleveraging occurs, everything can get hit. If what we are seeing is deleveraging, then I expect to see more asset price declines going forward. Of course, some will get hit harder than others. Just have to be very cautious and well-informed at this point, IMO.

[SK in CV]

[quote=CA renter][quote=paramount]If money is supposedly flowing out of emerging markets into US equities, why have the US market(s) taken such a big hit this year?[/quote]

When deleveraging occurs, everything can get hit. If what we are seeing is deleveraging, then I expect to see more asset price declines going forward. Of course, some will get hit harder than others. Just have to be very cautious and well-informed at this point, IMO.[/quote]

Deleveraging of what? Household debt? It’s been happening for the last 6 years. By some measurements, it’s at the lowest level in decades.

[spdrun]

Margin debt… the 1000 lb gorilla in the room.

[joec]

Yeah, still waiting for more crashes…There hasn’t been a 10% correction in a few years and they were “supposed” to happen almost yearly…

Wouldn’t mind seeing 20-40% off personally. Hope I got the stomach to buy when it collapses more.

Picked up 1 thing so far.

[spdrun]

Minus 20-25% would be ideal — enough to erase the past 12 months of frothiness, but not necessarily enough to cause the Fed to cut back on tapering if stocks level off afterwards.

I suspect that the Fed wants a hard correction, just not a 40-50% crash at this point.

Bonus points for Piggs if:
(a) the media gets in on the game. “Stocks falling, property prices falling again, don’t buy now, panic, panic, fear.” The lemmings will follow, smart people will act to the contrary.
(b) some people considering buying property will *have* to hold off.

[livinincali]

[quote=SK in CV]
Deleveraging of what? Household debt? It’s been happening for the last 6 years. By some measurements, it’s at the lowest level in decades.[/quote]

There’s been a little deleveraging in household debt but it’s not nearly as big as everybody thinks it is. Just go look at the Fed Z-1 and you’ll see that household debt peaked at 13.968 trillion in Q1 2008 and it’s currently at 13.083 trillion Q3 2013. Is a 6% decrease in household leverage a massive deleverging event. 10 years ago (2003) it was 9.463 trillion.

Take 1980 until 2013.

1980 Nominal Median Income = $16,542
2013 Nominal Median Income = $50,099
Increase of = 308%

1980 CPI = 77.8
2013 CPI = 232.9
Increase of = 299%

1980 Total Household debt = 1.3960 trillion
2013 Total Household debt = 13.083 trillion
Increase of = 1067%

All leveraged assets will get hit if their really is a deleveraging.

[an]

I hope we’ll see 20-40% over the next month or two. That would totally make my day.

[spdrun]

I don’t hope to see 40%. 20%-25% from peak (maybe 30% on NASDAQ) would cut the froth out of the markets without causing major economic damage.

[an]

[quote=spdrun]I don’t hope to see 40%. 20%-25% from peak (maybe 30% on NASDAQ) would cut the froth out of the markets without causing major economic damage.[/quote]I can totally use a repeat of 2008 and DOW dropping to 6000. But I’d settle for a wipe out of 2013 gain. Which would put the NASDAQ close to -40%.

[paramount]

All this because of a paltry 20 billion cut back on QE?

[spdrun]

No: all this because the markets outpaced economic conditions. Cutting QE is just a warning shot across the bow to get the markets to be more in line with fundamentals.

[paramount]

[quote=spdrun]No: all this because the markets outpaced economic conditions. Cutting QE is just a warning shot across the bow to get the markets to be more in line with fundamentals.[/quote]

A shot across the bow or a test or both?

From what I understand, earnings are generally good.

Just goes to show how heavily the equities market is manipulated – very little moving on fundamentals only on fed action.

[spdrun]

Earnings are good. They’re not so good as to justify the kind of gains we saw over 2013. Big deal. Dow is back to levels last seen in, oh, September of last year. Breathe. Relax. Enjoy the show.

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