MARKET CLOSE EXTRA: Dow suffers biggest weekly drop in two years

bgpadd to my Stocks
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UPDATE / SAT: US President Donald Trump skipped his usual tweet about the stock market today, and no wonder.

The Dow Jones Industrial Average dropped 665 points or 2.5% to 25,502 Friday US time — its biggest one-day decline since the UK.’s surprise vote to leave the European Union in June 2016.

Today's fall means the Dow is down 4.2% for the week — it's biggest one-week drop since January 2016.

Meanwhile, the yield on the benchmark 10-year Treasury note climbed to 2.852% on Friday, its highest level since January 2014 — and an indication that investors are starting to fear inflation as a key jobs report showed the return of wage growth. Renewed interest in bonds could also mean that some investors think the bull market has peaked following a 21% runup in the past year.

Amazon [NAS:AMZN] was one of the few stocks to buck the broad sell-off, rising 2.87%. The e-tailer, cloud computing provider and content streamer announced a fourth-quarter profit of $US1.9 billion (the first time the growth-focused company had topped $US billion profit in a quarter) on revenue that rose 38% $US60.5 billion. 

EARLIER / FRI: NZ shares rise, led by Air NZ, Briscoe; CBL falls before being halted
New Zealand shares gained, led by Air New Zealand and Fletcher Building, with Z Energy and CBL dropping.

The S&P/NZX50 Index rose 31.42 points, or 0.4 percent, to 8,415.29. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $168 million.

Air New Zealand led the index, up 2.6 percent to $3.13. This week the airline posted December operating figures, showing gains in passengers and revenue passenger kilometres.

"It has continued its recent strong bounce back, no new news but its operating stats the other day were solid enough," said Matt Goodson, managing director at Salt Funds Management. "The key headwind for them at the moment is rising fuel prices, but they do have a degree of hedging in the short term.

"Ultimately it's a bit of a double-edged sword, competitors who are perhaps struggling on the skinny long-haul routes into New Zealand may be less inclined to put new capacity on when prices are high. Plus the New Zealand dollar has been strong of late, and Air NZ is a key beneficiary of that."

Fletcher Building rose 2.1 percent to $7.96, Mainfreight gained 1.5 percent to $26.40, and Tourism Holdings jumped 1.4 percent to $5.84.

Z Energy was the worst performer, down 2.1 percent to $7.41, weakening off throughout the day following a significant line of stock changing hands at $7.45 before the market opened.

Infratil dropped 1.4 percent to $3.17 and Metro Performance Glass fell 1.1 percent to 93 cents.

CBL declined 0.9 percent to $3.17 before being put in a trading halt ahead of an earnings update on Monday.

Outside the benchmark index, Briscoe Group gained 2.9 percent to $3.50. It says full-year sales topped $600 million for the first time, helped by stronger revenue from sporting goods in the fourth quarter, and it expects to report a record annual profit of about $61 million.

Total sales rose 2.6 percent to about $194 million in the 13 weeks ended Jan. 28. Homeware sales climbed 1.3 percent to $124.8 million, although on a same-store basis they were down 0.3 percent, while sporting goods sales rose 5.1 percent to $69 million, or a 4.9 percent same-store gain.

"It was a solid update, reaffirming profit around where the market's at," Goodson said. "I think the stock's gain reflects general nervousness about retail, but it has been quite noticeable that retail in Australia and New Zealand does seem to have had quite a good Christmas."

With reporting by BusinessDesk


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Beginning of the end or end of the beginning?

Stay tuned.....

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It aint over till its over.

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You ain't seen nothing yet.
If you think that's a big fall stayed tuned ,it is not even the entree

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Markets go up, markets go down. Sometimes, markets go sideways. It's business as usual. There's nothing to see here, move along.

(for those who are a bit more savy, the US markets corected this week becuase finally, interest rates are starting to go up in the US. Equity markets and interest rates tend to have an inverse relationship to each other. Current US equity levels only make sense in a low interest rate environment. As interest rates climb, the market will correct from its current high levels, i.e., it will fall. Interest rates are a major cost to business, the higher they go the more they impact a businesses bottom line, thereby reducing profits. Interest rates also have a major impact on consumer spending as more money gets diverted into paying off credit cards, bank loans and mortgages. Less consumer spending equals reduced revenues for business. And finally, interest rates are a major compeititor for investments in equities. The higher interest rates go the more attractive investments become in what are regarded as the safer and less volitle investment in bank deposits and government bonds.)

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Mmm.

Here's another angle. The central bank stimulunacy over last decades - which sacrificed my prudent interest earnings to speculators of the asset bubbles which were created - has created a tsunami of debt the world has never seen before, most of it drawn down at near zero rates, by what will soon be zombie firms, in a debt market that is over four times bigger than share markets. As rates rise, like they are now, and the Fed finally continues QT, it is mathematics that the 120 high (per p/es) farcical share hyper-valuations - based on a pretty spurious story of synchronised growth, because growth has been slow, and Friday's sell-off was also due to low earnings results from several big companies, including Apple - are finally going to correct in what will become known as the Great Collapse, hopefully of central banking in its current form.

Because add to private debt the asylum of government debt, including the US's mushrooming debt on a tax cut package based not on reducing govt spend, that's increasing, but on borrowing a further $1.25 trillion on top of an already unpayable amount of US govt debt, plus a renewed defence spend, a renewed infrastructure spend, etc, etc. Noting Friday's sell-off was also due to a rise in the yield curve on Treasury moving to finance same tax cuts.

And Fed operations make BOJ and ECB policy over the last ten years look sane.

If next week doesn't go to the Great Collapse (VIX on 17%), and this is temporarily saved by the asylum investors and ETF Skynet buying the dip to reindex, then that doesn't really matter. It has to happen, I just hope we recover free markets back from it, not fascism or all the other forms of authoritarianism that are so embedded in the modern Western state - I'm not hopeful. Even more, I hope the three investment grade Austrailiansian banks I have all of my savings outside of my house, in cash, survive the maelstrom - because if they don't, then ...

... well, we already know there's no God, but it will be the opposite of poetic justice, whatever that is.

I've got a good cellar, though, so I can ride out on that.

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Damn. That's 120 year high valuations :)

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It's sad that you have had all your money (outside your house) in cash over the last 5-10 years. You have missed out on one of the greatest bull runs in equities in the last 30 years. Dude, it's called diversification, you know, not having all your eggs in one basket, in your case, cash. This approach to investing, this investment policy if you will is not a trade secret. It's one of the proven ways to reduce risk and increase returns. And you have missed out on it......

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Not the last 5 and more years. And I will have the last laugh :) #GreatCollapse #Mathematics

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It is more likely that we will see rising interest rates and rising equities go hand in hand going forward. While they are probably still teaching this one-dimensional economics analysis at University, the real world operates on a different level. The Fed raised interest rates from 3.5% in 1927 to 6% in 1929 and the stock market doubled. How do you explain that then? Much like the quantity theory of money has been discredited over the last 10yrs of QE, these market movements are multi-dimensional and beyond the scope of academics to explain...

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No. The distortions of free markets are so huge, it's the Great Collapse. This is inevitable now.

Reality will always out. I love reality.

What has, over time, outside the null mind of religion, destroyed more humans than any other thing?

Answer: hubris.

Another martini, I reckon ;)

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Ahem.

Got it wrong way around above: the BOJ and ECB loose as a goose monetary policy over last ten years makes Fed's stimulunacy look almost sane (which it was not, of course).

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Hi Mark
As Mark Twain said, prediction is difficult - especially when it's about the future. That said, I tend to agree with your prediction of a major collapse sometime fairly soon. The gigantic and unprecedented monetary experiment will go on and on - until it doesn't. The question is - then what? Cash and your own, debt free house and business seem to be about as good as can be at present.

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Another Black Friday ?

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