OT - Dow plunges 1,175 - worst point decline in history

[echappist]

Originally Posted by Rueda Tropical

Corporate debt may play the role that toxic mortgages did in 2008.

a point which @veloduffer noted at least a year back

[veloduffer]

Originally Posted by echappist

a point which @veloduffer noted at least a year back

Yes and kind of a ticking bomb. Since that time, leveraged loans have increased still as investors chase yield in risk assets. It’s ridiculous that as leverage and valuations have been climbing their spread over treasuries (risk premium) has gotten tighter. Investors are not being compensated for the risk.

If the virus really slows the economy for an extended time, there will be a big decline in earnings. This puts highly levered companies at risk that they can’t cover their debt service and may default.

When the credit cycle hits, sectors & companies become correlated by leverage.


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[93KgBike]

Originally Posted by 93KgBike

02-01-2019, 11:14 AM #705

Are stock buy-backs out pacing debt-service and dividends payments?

With syndicated debt running at >$2 trillion, and 30% of that as straight loans, the economy slowing even .001% is a problem. I'd argue that's the leading constraint against the fed continuing interest rate hike. Doesn't that seem like an admission that we are already in a recession, except for borrowing against it?

These questions have been hanging ripening for 13 months

[Louis]

It will be interesting to see what the stock market does next week...

[CNY rider]

Originally Posted by Louis

It will be interesting to see what the stock market does next week...

I was impressed by the "rally" Friday afternoon.
I have no idea who would want to go home long over the weekend in this situation.

[Tony T]

Originally Posted by CNY rider

I was impressed by the "rally" Friday afternoon.
I have no idea who would want to go home long over the weekend in this situation.

Could be short covering. There were at least 3 of these failed rallies this week.

[adub]

Dow futures down -350

This market was way overdue for a big correction, this is it.

With p/e expansions getting silly and so much of everything based solely on China (labor, production, imports, consumption, exports, etc, etc) this could get interesting..

[jlwdm]

Originally Posted by Tony T

Could be short covering. There were at least 3 of these failed rallies this week.

Looking at the QQQs Friday looked totally different than the last week.

Jef

[Tony T]

Originally Posted by adub

Dow futures down -350

This market was way overdue for a big correction, this is it.

With p/e expansions getting silly and so much of everything based solely on China (labor, production, imports, consumption, exports, etc, etc) this could get interesting..

....and DOW futures now up 115 (indicating a flat open)

[Jeff N.]

Originally Posted by Tony T

....and DOW futures now up 115 (indicating a flat open)

Compared to what we saw last week, I'll take FLAT all day long!

[mtechnica]

Calm before the storm. So far the virus hasn’t directly impacted business in the U.S.

[oldpotatoe]

Originally Posted by mtechnica

Calm before the storm. So far the virus hasn’t directly impacted business in the U.S.

Airlines have taken a big hit. Any 'hospitality' industry has already. Places that rely on Chinese supply will very soon, particularly those who deal in JIT' supply(Just In Time)...

But yup, gonna get ugly..plus an ego driven FED response to the virus..

[unterhausen]

Is that a response to the Fed?

[Ozz]

Originally Posted by oldpotatoe

Airlines have taken a big hit. Any 'hospitality' industry has already. Places that rely on Chinese supply will very soon, particularly those who deal in JIT' supply(Just In Time)...

But yup, gonna get ugly..plus an ego driven FED response to the virus..

Anyone else see this air pollution map of China?

"COVID-19 Lockdown in China sees air pollution levels tumble"

Compares current levels to that of a month ago.

Good news of COVID-19 is that the air is clearing over China, bad news is that it means they aren't making anything.....

[Tony T]

Originally Posted by oldpotatoe

Airlines have taken a big hit. Any 'hospitality' industry has already. Places that rely on Chinese supply will very soon, particularly those who deal in JIT' supply(Just In Time)...

And Apple, Microsoft and others have reduced their guidance.