US stock market slump

After soaring to record highs last week the US stock market took a dive today (Monday in the US).It recovered a little but ended the day heading downwards again.

It is still well up on where it was a year ago, but current momentum is drastically downwards.

One day movement:

One month movement:

One year movement:

Five year movement:

It’s impossible to know if this is just a sharp correction, or a sign of imminent financial collapse. There have been recent claims that world finances were precarious, and the US economy was on a knife edge, with lessons of the 2008 Global Financial Crisis not heeded.

Is it a good time to move Kiwisaver savings to a more conservative fund?

 

30 Comments

  1. David

     /  February 6, 2018

    Technical correction and profit taking, give it a few days to sèe if it’s a short term thing or a 6 month pause in the bull market.
    Don’t panic the US economy is booming fundamentals are great

  2. NOEL

     /  February 6, 2018

    Energy stocks like Exxon Mobil tumbled after oil prices fell sharply overnight.

    Brent crude has fallen to $US67.50 dollars a barrel

    Wonder when that will show at the pumps?

  3. Joe Bloggs

     /  February 6, 2018

    WASHINGTON —After watching it suffer its worst losses since he became President, Donald Trump is “seriously considering” firing the Dow Jones industrial Average, aides have confirmed.

    According to the aides, Trump is “furious” at the D.J.I.A. for going down so precipitously and believes that it has treated him “very unfairly.”

    “Increasingly, the President has become convinced that the Dow Jones Industrial Average is not on his team,” one aide said. “Seeing the negative Dow numbers in the corner of the TV screen has been wrecking eleven hours of every day for him.”

    https://www.newyorker.com/humor/borowitz-report/trump-considering-firing-dow-jones-industrial-average

    🙂

  4. david in aus

     /  February 6, 2018

    Conservative funds are not necessarily conservative. Conservative funds have a higher allocation of Bonds. Nearly all asset classes are overvalued. The Bond funds are getting hammered also. The global central banks have experimented by having the lowest interest rates in history. Some European government requires you to pay them to invest with them.
    The investment world is distorted. Capitalism has been undermined by governments.
    It doesn’t mean the economies will tank however, Wall-Street and Main-Street are not necessarily linked.
    I have a lot of assets in real estate which will be hammered with increasing interest rates, the best diversification for me is cash and gold not bond funds. Gotten out of shares last year. Waiting for a correction or a crash, to buy assets at a discount. This is probably a correction, to have a crash you will need a recession.
    Disinflation is ending and there will be a secular inflationary wave in the coming decades. 1970’s revisited. China which has exported low inflation and savings up to now will be running out of workers soon and will need to spend on the elderly. Setting the stage for an inflationary wave (my theory).

    • Blazer

       /  February 6, 2018

      ‘Capitalism has been undermined by governments.’…Capitalism has been undermined by…Capitalism’.

      • David in Aus

         /  February 6, 2018

        Capitalism is undermined by governments.Governments set the rules of capitalism.
        Booms and busts are a part of economic cycles when governments try to interfere they make it worse.
        Keynesian economics used to mean, save in the good times and spend in downturns. Governments and electorates have corrupted the concept to mean, deficit spending. Spend, spend…. you may get away with it in the short term but the day of reckoning will come. Instead of saving in the good times, like now in NZ, a government is elected that will say, we will spend the surplus because you deserve it. We should be preparing for the next downturn now and not spending willy-nilly.

        If you spend more than you earn, eventually you are going to pay; no matter the economic system, capitalism, feudalism or communism.

        • Blazer

           /  February 6, 2018

          the foundation of your argument is wrong…unfortunately…’Governments set the rules of capitalism.’.Banks set the rules and tell Govts to implement ..them.Btw forget cash and gold if things go tits up….a loaded gun and a…can opener are better..investments’.

          • david in aus

             /  February 6, 2018

            Banks don’t set the rules of the market. you have been reading too many conspiracies. Governments set employment law, budget deficit/surplus, tariffs, general regulation etc. They give the Reserve bank the task of regulating banks. But the government is the ultimate authority.

            Eventually, it is the borrowers who lend money to governments that call the tune (Bond market), if you have too much debt.
            Moral of the story, don’t get into too much debt.
            If inflation picks up, I would expect a bear market in the sharemarket. Based on historical averages, I would expect the US sharemarket to shrink eventually by 60-70%. Probably it will take 2 years to get there. I expect rallies and slumps in the meantime.
            This market is the most overpriced since 2000. More expensive than 1929 and 2007. Very little places to hide except in cash and gold.

            • Blazer

               /  February 6, 2018

              some conspiracy…

            • Blazer

               /  February 7, 2018

              now you’re getting it…’Eventually, it is the borrowers who lend money to governments that call the tune (Bond market), if you have too much debt.’…you realise the people doing the ‘lending’ are private bankers ,creating ‘money’ out of thin air and issuing it at interest.Good work…if you can..get it.

  5. PartisanZ

     /  February 6, 2018

    Oh it’s just terrible … What a fateful ‘decline’ … a bit like Auckland and NZ house prices over five years …

    … Dow overall increase from 15,000 to 25,000 …

    • 2Tru

       /  February 6, 2018

      “Dow Jones”. What a stupid statement if this is legit! What control does he think the president of the Dow Jones has on investors?

      • 2Tru

         /  February 6, 2018

        Since Trump has been taking much of the credit for the stock market rise, maybe he should be the one loaded into a very very big canon instead.

    • Joe Bloggs

       /  February 6, 2018

      The DJIA fell more than 1500 points just during his speech at the Sheffer plant in Ohio and finished the day down 1175 points

      Unfortunately trump’s budget cuts NASA funding to nearly an all-time low, and requires them to return to moonshots… so there’s not much likelihood of him (or them) following through on the Sun-King’s threat

    • MaureenW

       /  February 6, 2018

      That’s fake BTW. Anyone can create memes purporting to be from someone’s Twitter account

  6. 2Tru

     /  February 6, 2018

    The NZX was all red on Monday (except for Briscoes!) following Friday’s Dow losses. One of the biggest single day reductions I’ve seen in my share portfolio. The Dow dropped even further overnight but the NZX is closed today for Waitangi day. What happens to the Dow Tuesday night will impact on the NZX tomorrow. I wait with bated breath.

  7. The NZX is closed today so we won’t see what sort of a reaction we get here until after a half day of trading in the US Tuesday their time.

    But:

    Currently down 3.33% just after 3 pm AUS time.

    • David

       /  February 6, 2018

      For a bloodbath, there seems to be a rather significant lack of actual blood.

  8. David

     /  February 6, 2018

    Wonderful news! The rich just got a lot poorer, so inequality has been reduced. That, of course, means the poor are better off as a result right?

    • Gerrit

       /  February 6, 2018

      Except if the poor have KiwiSaver investments, their “wealth” might be down a bit as well.

    • david in aus

       /  February 6, 2018

      We did this! #Jacinda

      • PartisanZ

         /  February 6, 2018

        Sublime! #Ridiculous

        We start out discussing the US DJIA falling 10% and end up blaming Jacinda!

        Tell me again I’m an idiot to think there’s a Right-Wing anti-Labour-led conspiracy …

        • david in aus

           /  February 6, 2018

          Relax, a joke. Irony.
          Blame? The goal is to reduce inequality, no? The world richest people have just lost billions of dollars. A nice mirror image to the complaint the rich are getting richer. It was due to the financial markets increasing asset prices, but the government of the time was blamed. So isn’t the converse just as valid? It was a mirage. Their real wealth hasn’t really changed, just their paper wealth.

          • PartisanZ

             /  February 7, 2018

            One might equally argue that the inequality imbued into corporate-capitalism by the stock exchange mentality of unethical and therefore inhuman ‘economics’ will NEVER EVER be ‘adjusted’ by downward shifts in the stock market …

            It does nothing to reduce the differential advantage profit motive.

            In a universally poisonous environment where poison sinks from top to bottom, it’s a bit like saying “Rejoice! There’s less poison at the top now”

        • Gerrit

           /  February 7, 2018

          ahem, yep your an idiot to think every statement that in some way puts a questioning spotlight on Labour and the princess leader is a RWNJ conspiracy.

          Easy up sunshine, like the Queen, Adern farts like the rest of us.

          • PartisanZ

             /  February 7, 2018

            Taking my light-hearted comments kinda hard aren’t you …?

            Touched a nerve maybe?

            Or is there, after all, only one form of ‘sense of humour’?

            …. Yours?

  9. sorethumb

     /  February 7, 2018

    Because wages rising
    Not supposed to happen. Migrants are supposed to flood in (lowering wages) and returning incomes to owners of land.