• 702 days Will The ECB Continue To Hike Rates?
  • 703 days Forbes: Aramco Remains Largest Company In The Middle East
  • 704 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,104 days Could Crypto Overtake Traditional Investment?
  • 1,109 days Americans Still Quitting Jobs At Record Pace
  • 1,111 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,114 days Is The Dollar Too Strong?
  • 1,114 days Big Tech Disappoints Investors on Earnings Calls
  • 1,115 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,117 days China Is Quietly Trying To Distance Itself From Russia
  • 1,117 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,121 days Crypto Investors Won Big In 2021
  • 1,121 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,122 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,124 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,125 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,128 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,129 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,129 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,131 days Are NFTs About To Take Over Gaming?
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Global Equities Bear Market Has Us In a Hug

SUMMARY

Most of us are too old to cry, but it also hurts too much to laugh. The global equities are in a bear market.

The conventional definition of a bear market is a decline of 20% from the high (which in this case we define as the 1-year high).

Virtually every significant country equity index is in, or nearly in , a 20% or greater decline from its high.

After a crushing day with price declines through the after-market period of 7.44% for the S&P500 large-cap stocks, 9.98% for the Russell 2000 small-caps, 9.42% in emerging markets, and 8.97% in non-US developed markets; the futures markets are down substantially from there. Tomorrow could be another damaging day.

Within the US, consumer staples (e.g. soap and cereal) and utilities are holding up the best, but virtually everything in the corporate equity category is down.

The US debt legislation, European solvency crisis, and China growth slowdown and banking stress are high suspect culprits. Corporations are doing well fundamentally up to this point, but governments are not doing so well.

Markets have gone from orderly decline to disorderly panic meltdown. A rally is a distinct possibility, but a sustained rally is unlikely without further downside testing.

Fortunately, we have been eliminating equity positions for weeks and months, now holding cash allocations in the 65% to 75% range; and gold in the 10% range. As a result, we have not felt the full brunt of the panic sell-off, although we have not avoided losses altogether, because positions were eliminated as declines became apparent in individual securities.

It's time now to begin thinking about the shopping list for re-entry, and the market conditions that would make re-entry appropriate. More about that in a subsequent letter.

Tonight, let's simply review the charts to establish in a definitive way that the bear has us in a hug.


Global Equities Bear Market Has Us In a Hug

 

Read the Report

Back to homepage

Leave a comment

Leave a comment