Where are you hiding today?
- Bonds fell
- Big Tech is in decline
- Stocks fell across the board.
- Gold went down
- All commodities fell, including oil, which fell 3%.
All credit to everyone who bought Bitcoin, which is up 4.6% today and has seen a nice rise since it appeared in Mt. Gox headlines earlier this month. But for 95% of market participants, there’s nowhere to hide here.
The Crowdstrike fiasco certainly doesn’t help, and liquidity is bad today with some algorithms shutting down, but I don’t think that’s all. Market participants are now de-risking, reducing leverage and moving to margin. It’s been a really nice year and no one wants to risk blowing up on vacation in July or August.
Worrying about the upcoming earnings season and the AI/chip industry needing a break is very difficult. There is a sell option from the Fed, but by September the FOMC may be behind the curve and the macro situation becomes less clear.
…and don’t even get me started on politics.
All that said, the case for risk reduction here is strong and I think this started in early July and I doubt it is over yet. Furthermore, money will not be in a rush to get back in and buy before the bad September season, and this could extend into November.
So if you’re a fund manager who’s seen the S&P 500 rise 16% this year (or is close to that), what incentive would you have to risk your luck here? I don’t see it.
