It’s time to take a pause, and catch up on a few interesting developments in markets.
- Europe is teetering back towards crisis, as it awaits Spain’s’ budget and request for outside aide.
- European stocks had their worst day in 4 months today.
- The homebuilders have been, pretty much, the hottest industry in the world. But they’re starting to see some slippage. The homebuilder ETF is down by over 5% in the past few sessions. Also today’s new home sales were weak.
- The post-QE rally is all gone. We’re back to where we started before QE Open-Ended. That’s still a great rally year to date, but that’s come off.
- The “inflation trade” has really come off post-QE. Oil has gotten whacked. Other commodities have been hit hard.
- China = wreck.
- Tech has been a notable laggard.
- Apple has been leading the way down.
- It’s the end of the quarter, and portfolio rebalancing is a thing. Basically around this time, investors with certain defined allocations (xx% in stocks, xx% in bonds) have to move money from one asset class to another. Given the great performance of stocks this quarter, there’s going to be some selling in order to get the ratios back into whack.
Bottom line: A bout of risk off, with a heavy emphasis on undoing some of the moves that were made this quarter, perhaps partly as a result of end-of-quarter flows.
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