Stock Market Losses Worsen, The NASDAQIRI Reverses Into the Red

Many of the defensive names in utilities and REITs are higher today, alongside government bonds (extra TLT). I understand the Fed wants to hike rates. But this should not affect long term government bonds, as long as Japanese bonds keep plunging into deeper negative territory. Treasuries are the new Swiss Bank accounts, a safe haven for large amounts of cash. With more than 2/3rd’s of government bonds donning negative yields, it doesn’t take a rocket scientist to figure out why TLT’s 2.6% yield is attractive to Joanne (née) Billionaire with $300 million to park.

Whether the market is bound to trade higher or lower is immaterial to the seasonal aspects of the market now. Most accomplished traders and investors go on cocaine binges during the summer months, traversing the genteel streets of the Hamptons to La Jolla. No one really knows where markets will end up by Labor Day, nor do most care. The primary goal for asset managers, during summers, is to preserve gains and to survive through the alcohol imbued nights. Live to fight another day, wildly swinging at the markets without a fucking clue in the world.

Interestingly, defensive consumer staples are soft today, with the market lower and bonds higher. This is a notable change in market character, which might be the start of profit taking amongst a consumer staples group trading at historically high levels.

Worst case scenario, markets begin to decline, in earnest, and traditional safe havens drop in sync–leaving investors nowhere to hide but in cash. This is a recipe for true, delicious, disaster.