Chinese trade negotiators suddenly canceled a visit to meet U.S. farmers after they wrapped up trade talks in Washington this week.Marketsread more
President Trump also said he is "not looking for a partial deal" with Beijing, moving away from his suggestion last week that he would consider an "interim deal."Politicsread more
Progress on trade talks will determine how far market will move above new highs.Trader Talk with Bob Pisaniread more
For investors taking a breather from the chaos in August, buckle up as the market is about go crazy again, Goldman Sachs warned.Marketsread more
Michael Pack, a conservative filmmaker linked to Steve Bannon, saw at least $1.6 million in donations from his nonprofit sent into the coffers of his independent production...Politicsread more
The Patriots released Antonio Brown only 11 days after signing the wide receiver.Sportsread more
The Wall Street Journal's report came as a top Ukraine official said President Donald Trump "is looking" for Ukraine officials to investigate business dealings of Biden's son...Politicsread more
A tour bus carrying Chinese-speaking tourists crashed near a national park in southern Utah, killing at least four people and critically injuring up to 15 others, authorities...U.S. Newsread more
Gun maker Colt announced Thursday that it will halt its production of AR-15 rifles for civilian sales, but the news might not be as exciting for gun control advocates as it...Guns and Weaponsread more
As thousands of people across the world participate in the Global Climate Strike, several Democratic presidential candidates have shared how they will take aggressive action...Scienceread more
With "tariff man" President Trump waging a tariff war and Democratic candidates pushing against big international deals, free trade has become politically homeless, writes...2020 Electionsread more
Remember the brutal sell-off last year when stocks suffered their worst December since the Great Depression? Something worse than that could happen in days, a Nomura analyst said.
Macro and quant strategist Masanari Takada turned heads earlier this month with his bold call for a "Lehman-like" plunge. He's sticking with this prediction as market sentiment shows no signs of improving, leading him to believe a monster sell-off could arrive this week.
"The U.S. stock market especially is facing its greatest test of the year thus far," Takada said in a note to clients on Monday. Low sentiment is poised to prompt "panic-selling by fundamentals-oriented investors and systematic selling by trend-following technical investors along the way," he said.
Takada's view, the most pessimistic on Wall Street, is based on macro and quantitative data including flows from hedge funds and other players, which showed sentiment is approaching the lowest level of the current cycle. He had predicted the first explosion in the Cboe Volatility Index, aka Wall Street's "fear gauge," which swung to the highest in 2019 on Aug. 5 when China allowed its currency to drop to a level unseen since the financial crisis amid the trade war.
This week is also the last week before the Labor Day weekend. Volumes are typically low at the end of August, which could exaggerate market moves.
The Dow tanked more than 33% in 2008, the year in which Lehman Brothers went bust. The collapse helped catalyze the financial crisis and bring on the Great Recession. By March 2009, the benchmark hit its lowest level of 6,443.27, a peak-to-trough decline of about 55%.
Takada pointed out market performance over the past two weeks showed an "uncanny resemblance" between now and 2008. Technical investors including Commodity Trading Advisors are already trimming their long positions "at an accelerating pace," which could exacerbate selling going forward, Takada said. CTAs are trend-following quants that trade futures contracts and commodity options.
"The correlation between sentiment then and now remains quite high," Takata said. "Even the passing risk-on phase after the initial shock of the yield curve inversion ... and the risk-off mood that struck on 23 August neatly track the pattern recorded in 2008."
"If this uncanny resemblance between the two patterns continues to hold, sentiment could soon fall to a level not seen since December 2018," he added.
The Dow Jones Industrial Average suffered its worst day of the year Aug. 14 when the yield on the benchmark 10-year Treasury note broke below the 2-year rate, an odd bond market phenomenon that historically has preceded recessions. The curve has since repeatedly inverted as the longer-term yields continued to fall on trade war fears.
Stocks also took a big hit on Friday after China struck back by slapping retaliatory tariffs on U.S. goods. August has been a volatile month for stocks with the S&P 500 losing 3.5% so far.