Monday February 8th
Exchange-traded products (ETPs) and exchange-traded funds that are linked to volatility sink as there is a flood of sell orders. The DJIA dropped by hundreds of points.
In the afternoon Brian Frank of Frank Capital Partners sensed an opportunity as stocks that were expensive begin to look like better buys as prices tumble. He said today was not just another day at the office or business as usual.
Frank said: “You don’t get days like this often. No. 1, we have to capitalize on it. No. 2, we have to protect our clients.”
Later in the afternoon the situation gets worse as the Dow shed 850 points in just 15 minutes. Even Fox News switches from a Trump speech to report about the markets. Trump who has often taken credit in the past for new record highs on US stock exchanges is busy celebrating his tax cut as increasing paychecks and cutting your taxes.
At the close the DJIA ends up with its biggest declne in its 121 year history, 1,175.21 or 4.6 percent.
Tuesday February 6th
In Singapore, Kevin Tay, regional chief investment officer for UBS Wealth Management is busy calming clients' fears after yesterday's crash. He points out that economic fundamentals are still sound and that it is time to look for buying opportunities.
Credit Suisse Group moves to liquidate several investment products. Some are stunned by the speed at which some investments are collapsing.
Eric Peters, of One River Asset Management said: “What I don’t know yet is if this is a tremor or if it’s a crash."
However,
James Bullard, president of the Federal Reserve Bank of St. Louis said that the sharp correction should have been expected as the market had appeared "frothy" for some time:“This is the most predicted selloff of all time. The market kept going up and up and up. It’s no wondering it’s going down and down and down. What is more interesting is it has been very fast, it’s been possibly aided and abetted by technical trading—algorithmic trading." Others also blame the speed of declines on this type of trading.
Asian and European markets also take a tumble after the US crash on Monday.
The high volatility index with a VIX of 50 now from 17 on Monday creates alarm in many investors.
Wednesday February 7th
Trump finally tweets about the crash lamenting that as the economic news is good the stock market should rise and it was a mistake.
Investors fear to invest now that volatility is high but investors are relieved when the DOW closes at 24,893
Thursday February 8
The market starts out in the green but then wobbles. By noon the indexes are falling again and by 3 PM the drops have reached the level of a 10 percent decline from the high, signaling an official correction.
Advisors are kept busy assuring clients that their money will be fine but hope that there will soon be a rebound to help reassure investors. The DOW is not cooperative as it sinks into a loss at the close.
Friday February 9th
The final day of the week continued the roller coaster pattern. The DOW rose then fell sharply losing about 500 points by 1:30 in the afternoon. It rallied then dropped only to leap into positive territory at the bell being up fully 330.44 at 24,190.90. Still it was the worst week in the markets since January of 2016.
Summary and future concerns
Although there was a positive day on Friday gains for the entire year were wiped out over the week.
Volatility was high all week.
Yields spiked to a four-year high on Treasuries ending the week however at 2.85 percent near where they started.
Commodities including oil, gold, and industrial metals moved down and the dollar, euro, and pound all declined as well.
Traders now look to receive data next week on US consumer prices as during the week the 10 year yield pushed as high as 2.88 percent. Many investors are taking this as a signal that interest rates could rise and inflation gain speed. This could mean that consumer spending power and earnings will be less.
Not just U.S. stocks took a beating. Stoxx Europe 600 had its worst week since 2016 losing almost half of what it had gained this year. China's benchmark also fell the most in almost two years. The MSCI World Index also had its worst weekly drop since 2016.
An article at BNN provides guides as to what to do in this volatile market from a number of different investment professionals.
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