“The art of living is more like wrestling than dancing.”
— Marcus Aurelius,
For the full dashboard, please click on ‘Download’ below:
Well, that was quite the bloodshed!
We had been anticipating some kind of correction, but a) did not see it coming by a 5%+ one-day drop and b) of course were, with the benefit of hindsight not enough prepared for, despite some recent risk reduction on our portfolios.
But, hey, that’s the name of the game.
This weekend’s Quotedian will look in more detail on what has been happening on markets, once the smoke from the cannons on the battlefield has cleared somewhat.
In this morning’s The Tape section of The Daily Q we will just cover some of basics.
Why then the sudden nearly three percent drop (which extend to five percent by 5 o’clock and then some) in the Nasdaq right at the opening?
Why?
Fill in your favourite reason here: ________________ because your guess is as good as mine.
Was it the midterm elections result? Perhaps. But really, not so likely, as stocks were up on Wednesday, when the outcome was already well-known.
On second thoughts, when I see social media posts such as the sample belows, I understand that one or the other may have lightened up the US equity holdings in his/her portfolio:
‘Jokes’ aside, there are rumours of a hedge fund unwinding, which may have forced others to deleverage too, which sounds more realistic to me.
In any case, the discount investors get today on the Nasdaq’s market cap is of USD 2.5 trillion:
In just one day …
The S&P 500 did not fare much better with a four percent plus drawdown:
And hardly anywhere to hide with 85% of the constituents down on the day:
One place there was to hide was Treasuries, which for once, lived up to their reputation as “safe haven”. Here’s the 10-year US Treasury yield:
In general, the correlation between bonds and stocks has gone negative again, which is helping multi-asset class portfolios (e.g. 60/40) a lot:
Another asset that was rising in price was the US Dollar yesterday (here’s the USD Index - DXY):
Unfortunately I have to leave it at this, as I have to run into a first meeting. But, as I said, make sure to sign up to the weekly Quotedian if you have not done so yet, as I will cover much more in the edition to be issued Sunday afternoon/Monday morning:
Today, watch out for NFP numbers at 14:30 and even though we may see a rebound rally, be careful with your longs. Some more risk departments at prime brokers may be scrutinizing the margin of their hedge funds …
May the Hedge be With You!
André
The S&P 500 and Russell 2000 fell by the most in over a year and a half. The Nasdaq-100 and Semiconductors had the worst days since Covid.
The Important One:
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
Investing real money can be costly; don’t do stupid shit
Leave politics at the door—markets don’t care.
Past performance is hopefully no indication of future performance
The views expressed in this document may differ from the views published by NPB Neue Privat Bank AG
The Legal One:
This is one of the moments that make you catch the falling knife without a doubt, at least with a super tactical daily trade🤣