On top of that, we had some negative economic reports here in the US. The Philly Fed index absolutely plunged in August to a level of -30.7 from +3.2 last month. That is quite a drop. Additionally, Morgan Stanley downgraded its outlook of the economy and said we are getting closer to recession. I still think the odds of a true recession are about 50/50 right now, and a more likely scenario is just stagnating growth.
The 10-year yield also plunged this morning, touching the 2.0% level. That's lower than it got in December 2008, just for a reference. Investors who think a 10-yr Treasury at 2.0% is a better long-term investment than a blue chip stock with a 3% dividend are going to be sadly disappointed.
We are also seeing spikes in bearish sentiment. The CBOE put/call ratio has been above the 1.0 level for 15 straight days, and the 10-day average hit its highest level since 2008. Today, the volatility index (VIX) is spiking 30% higher back above 40, although it is still below last week's highs at 48.
The dollar is higher, which is weighing on most commodities. Oil prices are down to $83.15. But the flight to safety is pushing gold prices to new highs again, today topping $1820.
Trading comment: This morning's action makes me feel better about the recent sales we have made and the hedges we added to portfolios. Getting defensive when the markets are in a downtrend preserves both financial and mental capital, and both are needed if you want to be in a position to capitalize on things when the dust eventually settles. I hope everyone is managing their risk appropriately.
Posting Komentar