This couldn’t possibly be good for business. We are coming to the point where this group is going to boycott those products and that group is going to boycott these products. I heard Maria Bartiromo say with the decrease in ratings, the advertisers will be paying out less. That’s just the start of it because the horses really got out of the barn yesterday.
Open interest records: VIX futures hit a new record for open interest with more than 673,000 contracts on August 7, and VIX options reached a new record for open interest with 14,783,380 contracts open on Aug. 15. Volume records: Aug.10 was an all-time record volume day for both VIX futures (volume of 942,109 contacts) and for VIX options (volume of 2,538,121 contracts).
On a historical basis, yesterday's drop isn't particularly significant. As Eddy Elfenbein at Crossing Wall Street noted, "Last year, the S&P 500 had 48 days in which it closed up or down by more than 1%. In 2015, there were 72. So far this year, there have been seven." In other words, yesterday's fall only feels so large because we've been locked in one of the lowest volatility environments ever for the past few months. Remarkably, the S&P 500 has yet to see a 3% peak-to-trough drawdown since election day, over nine months ago.
Last week I told you risk for the markets was off the charts. Last week Google is down 1.5%, FB down marginally, Amazon down 2%, AAPL up marginally and NFLX down 5%. Biotech is down 2.9% as is housing. These are not big numbers, but when you look at some of these charts we are starting to see technical damage for the first time in a long time.
Right now, the FANG stocks are getting hit. The question is whether there will be follow through. But other sink holes in the market are developing. The Transports got smashed on Thursday and it was only three weeks ago they gave the Dow a Dow theory confirmation when both went to new highs. On Thursday and again Friday the Dow itself hit new all-time highs. You see the trannies going the other way so this is becoming the classic non-confirmation.
Another week, another failed attempt to go down. What happened this time? I almost don’t remember. First, the health care debate was going to be delayed due to Senator John McCain’s operation to remove a blood clot from his brain. We later found out McCain has an aggressive form of brain cancer, and that shocked the nation.
It’s been a long season of disappointment for the bears. Chalk up another one. Once again, the Dow came to edge and didn’t jump. Tuesday was the big day. Markets started dropping like a rock on the apparent news of yet another “Russian collusion scandal” involving Trump’s son. You know all about it. But by the time it started turning up news broke the Senate decided to stay in session for the better part of August. Markets turned up and fully recovered.
Here’s the good news, 8,000 jobs were attributed to mining and any jobs in that beaten down arena is welcome. But 37,000 jobs were attributed to health care. Why isn’t that good? Some of you will recall the only reason Obamacare exists is that Fannie Mae and Freddie Mac have been looted to the tune of billions. It is called “Net Worth Sweep.” It was first reported months ago by Jerome Corsi but confirmed several weeks ago by Mnuchin on the Maria Bartiromo show.