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  #541  
Old 01-16-2018, 02:37 PM
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Default Remove the punchbowl before markets get crazier

Remove the punchbowl before markets get crazier
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  #542  
Old 01-29-2018, 08:40 AM
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Default Today Monday Jan 29/18

Bond ETFs ‘awash in pain’ in possible sign of equity market pullback

SCOTT BARLOW
PUBLISHED 2 HOURS AGO
UPDATED JANUARY 29, 2018
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Goldman Sachs is warning of an impending equity market correction but strategists remain bullish for the year, and recommend buying any dip,

"The S&P 500 and MSCI World Index have entered their longest period without a correction of more than 5%. This has been the strongest start for global equity markets in any year for at least 30 years, and is even more extreme on a risk-adjusted basis… There remain good reasons to be bullish equities for the year… [but] a correction is becoming increasingly likely. Our GS Risk Appetite indicator is near its highest level ever, pointing to a sharp rise in optimism."

"@SBarlow_ROB GS: "a correction is becoming increasingly likely"" – (research excerpt) Twitter

"[Market] Things That Go Bump In The Night" – Hunt, Epsilon Theory

=====

U.S. equity market euphoria is shared by hedge funds in the oil futures market,

"Another significant sign the oil crash is behind us, is the clear shift in the futures curve. Both in New York and London, the closer the delivery, the higher the price all the way through 2022. That pattern, known as backwardation, is typical of times when demand is rising and supplies are tightening, and it hadn't been so marked since 2014… "Selling begets selling and and buying begets buying," Pavel Molchanov, an energy research analyst at Raymond James in Houston, said by telephone. "There is a momentum trade at work here. Technicals look great and there is positive sentiment.""

"Hedge Funds Are Betting Big on Oil" – Bloomberg

"Oil dips but still set for strongest January in five years" – Reuters

"Why Canada is the next frontier for shale oil" – Reuters

=====

There seems to be no limit to the insanity of the cryptocurrency markets,

"At 2:57 a.m. on Friday morning in Tokyo, someone hacked into the digital wallet of Japanese cryptocurrency exchange Coincheck Inc. and pulled off one of the biggest heists in history. Three days later, the theft of nearly $500-million in digital tokens is still reverberating through virtual currency markets and policy circles around the world."

So, basically a massive bank heist was accomplished without the thieves leaving their keyboards.

"Massive cryptocurrency heist spurs calls for more regulation" – Report on Business

=====

I'm watching U.S. corporate bonds closely for signs that market sentiment is turning away from risk assets, in this case high-yield bonds.

Bond ETFs are getting hit across the board as yields rise and there are both potential bullish and bearish reactions. If investors sell bond assets and buy equities, stocks indexes could go to the moon. As Bloomberg highlights below, losses in bond markets could also cause general risk aversion and selling equities.

"Bond ETFs Awash in Pain May Be Red Flag for Risk Appetite" – Bloomberg

"@SBarlow_ROB GS: IG over HY – (research excerpt) Twitter

=====

Tweet of the Day: "@ReutersJamie "If the 10-year goes above 2.63 ... it will accelerate higher and equity markets are going to be spooked and maybe that's the cocktail that is coming our way." - @TruthGundlach on Jan. 10. 10y yield now 2.72%. Stocks about to be spooked? " – Twitter

Diversion: OK, this is alarming. The U.S. military is actively preparing to fight in North Korea according to one U.S. senator who visited South Korea.

"'The Military Has Seen the Writing on the Wall'" – The Atlantic

See also: " Alpha agenda, the new Cold War edition" – FT Alphaville
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  #543  
Old 02-02-2018, 03:26 PM
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Default The 91 most important economic charts to watch in 2018

The 91 most important economic charts to watch in 2018
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  #544  
Old 02-05-2018, 08:30 AM
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Default Monday Feb 5/‘This is the market dip you wanted’18--

‘This is the market dip you wanted’

SCOTT BARLOW
PUBLISHED 1 HOUR AGO
UPDATED FEBRUARY 5, 2018 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

CNBC's Michael Santoli offered some good perspective on ongoing market upheaval by starting his column with "This is the market dip you wanted."

After two years of record-low volatility and U.S. equities that went higher in a seemingly unbroken line, higher bond yields are reminding investors on both sides of the border that risks have been building.

Mr. Santoli went on to suggest significantly more selling for the S&P 500, a possible test of the 200-day moving average which is eight per cent below current levels. I'm not sure about that.

The domestic earnings reporting season is only just heating up, but U.S. results have shown extremely strong results. Global economic growth is similarly healthy which should help cyclical companies – Caterpillar Inc. announced enviable sales momentum recently – and commodities.

Markets will have to recalibrate for higher borrowing costs, but hopefully that's all that's happening now.

'Watch for another selling wave in the stock market as investors are forced out of their low volatility bets" – Santoli, CNBC

"Amid stock market selloff, U.S. profit forecasts rise" – Reuters

"Don't Panic. This Slump's Just a Blip: Treasury yields north of 3 percent won't stop the party" – Gadfly

"UBS Says Now's Not the Time to Sell Stocks—If Bond Yields Behave" – Bloomberg

=====

Oil prices are significantly lower as part of general risk aversion as U.S. crude production continues to climb,

"'Oil is caught up in this general risk-off move, not helped at the margins by a little bit of strength in the U.S. dollar,' said Ric Spooner, chief market analyst at CMC Markets in Sydney … 'We're really going into a period of a lot of refining maintenance so it's not unexpected that (the sell-off) is happening,' Petromatrix strategist Olivier Jakob said."

"Oil skims one-month low, investors punish equities and commodities" – Reuters

"Brent Slips to One-Month Low as U.S. Drilling Grows, Stocks Drop" – Bloomberg

=====

The sectors I'm watching for hints of a deeper sell-off are in the riskier end of the global credit market,

"Global Rout Takes Hold of Junk-Bond and Emerging-Market Funds" – Bloomberg

"@LJKawa Cumulative weekly outflows from HYG & JNK hit second-highest level on record: >$2.5B." – (chart) Twitter

=====

Tweet of the day: "@francesdonald Check this chart from National Bank Econ. If the BoC hikes another time this year (they will) for a total of 100bps since July'17, homeowners in Vancouver and Toronto will need about 9% more income to cover the total payment shock. (Wages are up 2.9% y/y right now, btw)." – Twitter

Diversion: How the Vanderbilt heirs managed to blow a US$5-billion fortune,

"The Best Way to Lose $5 Billion Dollars" – Of Dollars and Data
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  #545  
Old 02-05-2018, 08:33 AM
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Default "The Best Way to Lose $5 Billion Dollars" Vanderbilt

How the Vanderbilt heirs managed to blow a US$5-billion fortune, "The Best Way to Lose $5 Billion Dollars" – Of Dollars and Data
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  #546  
Old 02-05-2018, 07:00 PM
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Now those days it is easy you just buy bitcoins at highest price and keep it at some Japanese bitcoin exchange.
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  #547  
Old 02-06-2018, 10:15 AM
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Default What just happened to markets?

What just happened to markets?

SCOTT BARLOW
PUBLISHED 4 HOURS AGO
UPDATED FEBRUARY 6, 2018 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

There is no economic or corporate data point that set off the selling Monday, and that's part of the problem.

The lack of clear catalyst caused indiscriminate selling in all risk categories, including commodities, emerging market debt and cryptocurrencies.

There is some derivatives-related shenanigans surrounding the CBOE Volatility (VIX) Index that is at least in part responsible for market weakness, so it will be a few days before we completely understand what's going on.

My reading, so far, is that a normal market correction after a huge rally to start the year morphed into something more intense. Specifically, a popular trade that saw hedge funds and other speculative investors shorting the VIX index has to be unwound. Trading in the VelocityShares Daily Inverse VIX Short Term ETN has been halted after falling 80 per cent in value and its underwriters are debating liquidating the product.

The best description of the VIX-related options activity came from Reuters. As the VIX rose, speculators with short positions rushed to cover their positions, driving the index rapidly higher. At that point, algorithms programmed to sell equities when the VIX climbs went in to overdrive. In short, blame the machines,

"'The day started out fairly orderly, but somehow it took a turn for a worse, and then panic set in,' Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. 'There may have been some pretty sizeable program trades that were clicked in. It just looks like some institutional program selling,' he said.

"Volatility spike boosts U.S. options hedging activity" – Reuters

"VIX at 38 Is Waterloo for the Beloved Short Volatility Trade" - Bloomberg

"@lisaabramowicz1 The VIX has gone vertical, now at the highest level since March 2009" – (chart) Twitter

"The VIX Spike Deserved to Happen" – Gadfly

"Oil eases, but avoids stocks-style volatility" – Reuters

=====

Bloomberg attempted to uncover the root cause of market weakness, but the explanations sound entirely "after the fact" to me at least. The potential culprits listed are bond yields, Federal Reserve policy, overheated technical and valuation measures and the shorting volatility trade mentioned above.

"What on Earth Happened to Stocks? Here's Where to Cast the Blame" – Bloomberg

=====

As far as "what do I do now?," the Financial Times' Alphaville site (free access with registration) helpfully collected advice from major Wall Street analysts and strategists. The quantitative strategy team at JP Morgan wrote,

"The fact that small caps, tax beneficiaries, value and domestic stocks are lagging since the bill (e.g., vs. international, growth, large-cap tech) is evidence that fiscal reforms are not fully priced in. In terms of timing market downside risk, we would be more concerned about the period after the Q1 earnings season (e.g., in 'sell in May'), when fiscal reforms are likely to be priced in and central banks make further progress on the normalization of monetary policy.

"Inhale, exhale, pause" – FT Alphaville

=====

Tweet of the Day: "@michaelsantoli Maybe this market shock is "about" $XIV and other short-volatility instruments the same way the late-2015 correction was "about" that doomed Third Avenue junk fund. Meaning it's not so much a "cause" as a symptom, emblem and ultimately a sacrificial offering to the market gods." – Twitter

Diversion: "Top Global Destinations On The Rise According to TripAdvisor" – Arch Daily
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  #548  
Old 02-06-2018, 10:18 AM
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Default Blame this market meltdown on ‘too much optimism’

Blame this market meltdown on ‘too much optimism’

DAVID ROSENBERG
PUBLISHED 45 MINUTES AGO
UPDATED FEBRUARY 6, 2018 FOR UTOPA
I recall saying recently that bull markets are like escalators on the way up and bear markets (and corrections) are like elevators on the way down. That is the history of the market and we are living this now in real time.

What got lost in all the jubilation of late, with U.S. President Donald Trump as the nation's equity cheerleader, is that markets move in two directions – it is not a one-way ticket up.

And so what happens, of course, since there often is so much psychology behind the swings in asset prices, is that a prolonged period of calm, one-way action (in which we experienced an unprecedented period without even a minor setback – 311 sessions without so much as a 3-per-cent decline; 405 days without a 5-per-cent correction), tests investors' resolve. And investors, in aggregate, failed the test, as they chased the market when it had staged a parabolic surge to the highs less than two weeks ago by plowing a record $102-billion into global equity funds and ETFs.

Bulls can make money, bears can make money, but pigs get slaughtered. The notion of FOMO (Fear of Missing Out) was destined to be a losing strategy. And as such, we just had a chance to have a ringside seat and see Bob Farrell's Rule #5 come to fruition before our very own eyes – on how retail investors can always be expected to buy the least at the lows and most at the highs.

Everybody seems to be searching for a reason for this recent sharp reversal, and, as usual, this is like grasping for straws.

Everyone needs – no, demands – an explanation.

But again, as Bob Farrell, a legend at Merrill Lynch & Co., taught us, it is the markets that make the news; the news does not make the markets. The same pundits who claimed it would take the yield on the 10-year T-note to break above 3 per cent to cause a correction, or the long-awaited inversion of the Treasury curve, well, neither‎ of these ever did occur, either.

The plain fact of the matter is that far too much optimism was priced in at the recent highs. The world is not a perfect place but we had valuations priced for perfection, which is not a timing device but a warning signal, nonetheless. We had the forward price-to-earnings multiple at 18.4 times at the nearby highs and over 23 times on a trailing basis and let me tell you, that doesn't happen very often, even in past periods of low interest rates. Whether you look at P/E, price/sales, price/book, the CAPE, price/net free cash flow, EV/EBITDA, and you can control for whatever discount rate you want, only 10 per cent of the time had the stock market been this pricey in the past. Even our in-house model had this market pegged at 15 per cent above fair-value less than a month ago.

We continue to hear about how great the fundamentals are, but they were even better in 1987, 1994, and 1998. All those years were filled with angst and anxiety, because one always has to take an eclectic and holistic approach to the markets – it is not just about fundamentals at any point in time, though of course this is what the bulls are clinging to at the moment.

Liquidity, technicals, market positioning and valuations are key ingredients to pricing of any asset. And in addition to overly bullish market positioning and sky-high valuations, we also suddenly had liquidity conditions become an issue in recent days. And this is at least partly because of who the principal buyers had been during much of this bull run – machines, indiscriminate buying into passive ETFs, robo-advisers, ‎low-volatility equity funds and the like. Almost like the program trading and portfolio insurance of the mid-1980s.

Speaking of 1987, by the way, the fundamentals then could scarcely have been better – 50-per-cent year-over-year earnings growth, 7-per-cent real GDP growth and unemployment at cycle lows. That's even better than we have today. We had tax reform back then, too. But we also had exuberance bordering on euphoria. We had a new Fed chairman – another source of uncertainty. And amidst a tightening cycle to boot with more being priced in (the 2-year note yield has soared 90 basis points in less than five months and the last time that happened was back in the first half of 2008). Of course, we have a policy-induced weakening in the U.S. dollar along with growing trade disputes and heightened geopolitical risks. The comparisons are pretty stark even if two cycles are never quite a 100-per-cent match.

Let's just say that the extreme levels of complacency and valuations left the market susceptible to what we have witnessed in the past week or so. For those who don't like to pay attention to valuations, I say this: rare is the day that corrective activity as we have just endured occurs in the context of an undervalued market. Full stop.

So here's where we stand. The past two days have seen 1,841 points lopped off the Dow. That is a swift 7-per-cent pullback. Monday's 1,175-point plunge – down around 1,600 at the worst levels of the session – was the steepest decline ever in terms of points, but actually ranks in the 99th percentile in terms of per cent decline (on Oct. 19, 1987, the Dow fell 508 points but that represented a 22.6-per-cent slide). The recent plunge has now taken many markets into negative terrain on a year-to-date basis – the TSX (down 5.4 per cent), Japan's Nikkei 225 (down 5.1 per cent), Australia (down 3.8 per cent), Euro Stoxx 50 (down 2.7 per cent), the Dow (down 1.5 per cent), the S&P 500 (down 0.9 per cent) and Korea (down 0.6 per cent). Hard to believe that the S&P 500 was up 7.5 per cent for the year less than two weeks ago! But to tell you the truth, as far as market carnage is concerned, there has been little in the way of anxiety over this pullback, and little in the way of any spillover to other asset classes.

Normally, one would see a huge flight to safety as in government bonds – but that hasn't really happened, in part because this Fed now led by Jerome Powell is not likely to be swayed to move off the tightening program. The yield on the 10-year Treasury note at one point rose as high as 2.9 per cent Monday morning and even with the modest rally, is still close to the high end of the recent range at just over 2.7 per cent. A real panic would have at least taken the 10-year down closer to the 200-day moving average of 2.3 per cent. With the VIX soaring above 37 and tripling in just the past three weeks – at a level now we haven't seen since August, 2015 – one would think that credit spreads would have widened sharply, too. But they haven't – at 103 basis points for investment-grade and 353 basis points for high yield, they have only widened 2 basis points, and 17 basis points, respectively, over the past week.

Commodities have weakened too (oil down today for a third session in a row – to US$63.73 per barrel, and the base metals have declined across the board) but have far from collapsed. And as with bonds, no flight to the U.S. dollar either, as the DXY U.S. dollar index is off 10 pips this morning to 89.5. Not even gold, with the sizeable inverse relationship to calmness, has lifted off as much as one would expect with such nail-biting – stuck around US$1,342 per ounce.

So far, this has been a stock market sell-off that seems idiosyncratic and specific to equities alone – it is rare to see such little spillover to other markets. Either they are waiting their turn or this carnage is simply a stock market development on its own (very rare indeed). But the fact that the S&P Financials were down close to 5 per cent Monday and underperformed the broad market often does serve as a canary in the coalmine. And also note the big outperformance here of utilities relative to transports – not exactly a pro-cyclical development.

Let's look at the situation from a few angles.

The market slide has to be viewed in the context of a Dow that surged 25 per cent in 2017 and more than doubled the earnings growth we saw. From election day, the blue-chip index is still up 33 per cent. The bottom line is that we were long overdue for a correction to occur and keep in mind we still have yet to experience one in the major U.S. averages. Yet, since 1900, we have seen interim declines, in the form of bear markets or mere corrections, no fewer than 125 times. That works out to once per year, on average. Not just that, but the forward P/E multiple on the S&P 500 has pulled back about one point, and at 17 times, is still close to a 14-year high and above the peak of the credit bubble in the summer of 2007. So, we still have a market that has yet to officially correct. We still have a market with an excessively high multiple.

But we also have a market that looks oversold on a near-term basis, finding technical support at the 100-day moving average (2,634 on the S&P 500) – a test of the 200-day would mean a move to 2,534. Looking at Fibonacci retracements (from the early 2016 lows to the recent peak), we also have found support at a first-order reversal (2,626). But a second order sets us up for a move to 2,474 (and a fifth order to 2,075 – nice to know what the worst-case outcome can be). The key will be, if we do see a knee-jerk rally here from oversold levels, is what the rebound would look like from a pure technical basis.

Please – ignore the talk of positive fundamentals, that is not the story here. Watch breadth and measures of divergence here if the market does start to come back – a new high that sees the advancers-decliners line roll over, as an example, would be fodder for those that retain a cautious posture.

As for the fundamentals, consider that the Citigroup economic surprise index has rolled over in a material way. The wage recovery is narrowly based and there are few signs that the tax cuts are going to fuel a capital expenditure boom – that somehow escaped the core durable goods orders in December which were revised down from an already disappointing print. The fiscal stimulus was hastily designed and the timing very poor from a cyclical perspective. What it has done, actually, is place this new Fed leadership in a box. And Mr. Powell is not going to be a Chairman who will be as willing as his predecessors to step in and soothe investors' anxiety levels. And keep in mind that we can trace 1,000 points, or half this bull market, to Ben Bernanke and Janet Yellen who made it their goal to generate a wealth effect on spending by inducing a relentless liquidity-driven bull market in equities. No matter what else happens from here, that era just ended at Janet Yellen's last meeting a week ago. And notice just the slightest less dovish tone to that press statement, which had Mr. Powell's thumbprints over it as opposed to Ms. Yellen.

I should add that for all the chatter of how well the U.S. economy had been doing, it was all premised on how the stock market shaped people's views. The surveys had been firm, indeed, but it is one thing to fill out a form for ISM or the Conference Board or the NFIB for that matter, and another to actually act on your feelings. And in terms of the broad economy, when we strip out the post-hurricane "repair and rebuild" stimulus and the credit-card binge that dragged the savings rate down to 12-year lows, real GDP growth in the third quarter was zero. And looking at the deep hole we are in with respect to aggregate hours worked following Friday's jobs data, it will take a productivity bounce of size to get real GDP growth above zero this quarter as well. I doubt a stagnant economy is going to be very consistent with a CAPE multiple that is still flirting at levels that surpassed prior cycle peaks (outside of 1929 and 2001, I should add). So maybe, just maybe, if the stock market is paying attention to the so-called fundamentals, it may actually begin to not like what it sees.

Finally, in keeping with the tip-of-the-hat to Bob Farrell, Rule No. 4 deserves a mention – a classic last but not least: "Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways." I think we can safely say that we had something rather exponential happen through most of January, when the S&P 500 hit the consensus year-end target three weeks into the year. And we have not exactly corrected by going sideways either.

David Rosenberg is chief economist with Gluskin Sheff + Associates Inc. and author of the daily economic newsletter Breakfast with Dave.
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Old 02-06-2018, 10:22 AM
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Default Six reasons why....

Six reasons why this may be an opportune time to buy stocks

JENNIFER DOWTY
PUBLISHED FEBRUARY 6, 2018
UPDATED 1 HOUR AGO
FOR UTOPIA
The stock market sell-off has been swift and steep.

Last week, U.S. Treasury yields continued to spike higher, which weighed on equity markets. However, it was a strong U.S. employment report released on Friday morning that triggered a market meltdown as inflationary fears sent investors scrambling to exit positions.

Major U.S. markets have been in a free-fall for the past two days, and this sell-off has had a ripple effect with weakness spreading globally.

In Canada, the S&P/TSX Composite Index has nosedived, declining 616 points or 3.9 per cent month-to-date.

On Monday, all 11 sectors in the TSX Index closed the day in negative territory with seven sectors realizing losses of 1 per cent or more.

Only 53 of the 250 stocks in the TSX Index finished the day in positive territory. There were few safe havens for investors to seek refuge.

Sellers have remained in control with buyers waiting on the sidelines. On Monday, trading volume was high as selling pressure intensified with algorithm trading and margin calls contributing to the market sell-off.

But there is a silver lining as panic often creates buying opportunities for long-term investors. This is particularly true when underlying fundamentals are supportive, which appears to be the case right now.

Here are six reasons why this may be an opportune time to buy stocks.

1. The economic backdrop is positive.

Both the Canadian and U.S. economies are expanding at a healthy rate. Last month, the International Monetary Fund (IMF) raised its growth forecast for the Canadian economy to 2.3 per cent in 2018 from its previous expectation of 2.1 per cent. The IMF has more robust expectations for the U.S., anticipating its economy will expand by 2.7 per cent in 2018.

2. Corporate earnings growth is strong.

The Street is forecasting earnings growth of 22 per cent for the TSX Index in 2018. Interest rates, while rising, are still very low, supportive for companies to grow. Furthermore, the U.S. Federal corporate tax cut will boost earnings for Canadian companies with U.S. operations.

3. This sell-off has made valuations more compelling.

The TSX Index is now trading at a price-to-earnings (P/E) multiple of 13.7 times the 2019 consensus estimate, down from nearly 16 times in late-December, when it was close to its peak. The forward P/E multiple is now well below its three-year historical average of 15.2 times.

4. Many companies have solid balance sheets, and again, some companies will benefit from the U.S. corporate tax cut.

If valuations keep falling, companies may choose to repurchase shares as part of their share buyback programs, and such buying activity may provide support to stock prices. Furthermore, some management teams may seize the opportunity to make acquisitions, using the sell-off as an opportunity to buy companies at low valuations.

5. On Jan. 4, the TSX Index closed at a record high and was technically overbought.

Since then, the index has fallen 6.6 per cent and is now technically in oversold territory. Stocks in the Index are trading at more attractive valuations compared to where they were just six weeks ago.

6. The VIX Index, commonly used as a stock market fear measure, spiked to 37 on Monday.

Looking back over the past five years, the only time the VIX was higher was on Aug. 24, 2015 - the day of the so called "flash crash". On Aug. 28, just four days later, the TSX index had rallied over 800 points or 6 per cent. In other words, buyers returned to the market and the peak in the VIX marked a near-term inflection point.

So what can investors do right now?

I would argue that this is a time for investors to be making a shopping list of stocks to purchase, focusing on companies with strong underlying fundamentals with attributes such as positive sales, earnings, and dividend growth, positive earnings revisions, positive earnings surprises and solid guidance for future growth.

Keep in mind that markets often overshoot to the upside when rallying but also overshoot to the downside on weakness. Consequently, this markets sell-off may continue over the next few days. A floor has yet to be established so the market slide is likely to continue.

An effective investment approach is to stagger your purchases once the market begins to show signs of stabilization. That way, if there is further downside in the future, you can accumulate more shares - never invest your money all at once. During this time of market mayhem, make a list of stocks that you want to own within a well-diversified portfolio.

Investing icon Warren Buffett relates investing in the stock market to baseball saying, "The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot."

So construct an investment plan, set your target prices, and get ready to take action. For many stocks, a sweet spot may be approaching.
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Old 02-09-2018, 08:10 AM
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Default Today-Friday Feb 9/18

This is the 5th market correction since 2009

SCOTT BARLOW
PUBLISHED 53 MINUTES AGO
UPDATED FEBRUARY 9, 2018 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

As former CNBC stalwart Jeff Macke is fond of pointing out, markets do not make sustainable bottoms on Fridays, so investors should take today's market activity with a grain of salt.

Ritholtz Wealth Management's Michael Batnick published a joking 35 Steps to a Market Bottom that begins with "1%: Mock the Permabears," proceeds to "33%: I don't even care anymore" and ends with "35%: Market bottom."

=====

Canadian employment data was announced at 8:30 am this morning and on the surface, the results were terrible. CIBC, however, is suspicious,

"January saw an 88K drop in employment, reversing about half of the spectacular gains we registered late last year. But the details also looking wonky, with all of the job losses in part time work (-137K), and the jobless rate only moving up one tick to 5.9% as the participation rate took a big three point drop. Those looking for the impact of the minimum wage hike in Ontario might find evidence in a 51K drop in that province's employment (all of which was in part time, where we would be looking for that impact), but curiously, all of that was due to a drop in labour force participation (with the jobless rate actually edging lower)."

"@SBarlow_ROB CM is suspicious re Canadian employment numbers" – (research excerpt) Twitter

=====

I'm watching U.S. high-yield bond spreads as a key indicator of how bad the sell-off will get. The news there is not great this morning as investors flee the related ETFs,

"@lisaabramowicz1 State Street's high-yield bond ETF that trades at JNK has lost about $4 billion of assets since the start of the year, with assets going from $13.86 billion to $9.78 billion in a little more than a month." – (chart) Twitter

"Junk Bonds Are Starting to Crack as Stock Selloff Persists" – Bloomberg

"This indicator will tell you when this bull market truly is over" – Barlow, Inside the Market

"Bond Traders Have Gone From Hoping for Volatility to Worrying About It" – Bloomberg

See also: "US leads record $30.6bn outflow from global stock funds" – FastFT

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The PM visited with Jeff Bezos in private yesterday. Bloomberg took the opportunity to point out that Canada's technology sector is treading water as a percentage of the overall economy,

"The Amazon headquarters in particular offers the biggest potential prize for Trudeau, who's become the salesman-in-chief for an industry he hopes will transform the Canadian economy into a center for brainy tech companies, from its traditional role as commodity producer. Yet, given the sector only represents 4.5 percent of the nation's gross domestic product, a level that's changed little over the past 10 years, it's an ambitious goal."

"Trudeau Meets Bezos in San Francisco. Here's How Canada Is Doing on Tech" – Bloomberg

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Bloomberg helpfully reminds investors that, while market corrections are disconcerting, they are a normal part of market rallies,

"this is the fifth correction since 2009, according to Yardeni Research, and as of right now the latest one is the smallest. The S&P 500 Index dropped 19.4 percent in 2011 before recovering. The index was down 16 percent during a stretch the year before that, during the European debt crisis."

"Don't Forget This Bull Market Hasn't Been Correction-Proof" – Gadfly

"@CNBCClosingBell .@michaelsantoli putting the sell-off into perspective. "Draw a line from the start point [on a 2-year S&P 500 chart] up to where we are right now...we're back to basically where we were in November."" – Twitter

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Tweet of the Day: "@LJKawa Still dying to hear any more theories or thoughts on why this is happening. bloomberg.com/news/articles/… Because it's still happening." – (chart) Twitter

Diversion: "When will the world reach 'peak child'?" – Our World in Data
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