Last Wednesday, the Fear & Greed Index examined ‘greed,’ but it was on the cusp of ‘extreme fear’ by Friday's closing bell.

Internals

There was some green on the screen, but for the most part, investors took their licks and chips and headed for the sidelines.

Growth Still the Safe Haven

For all the hype about mid and small-cap stocks, investors felt more comfortable holding growth despite the lack of winners.

Three sectors eked out gains as traditional havens.

Selling volume tells you everything you want to know.

Market Breadth	NYSE	NASDAQ
Advancers	715	806
Decliners	2,113	3,458
New Highs	158	108
New Lows	116	324
Up Volume	706.61 million	1.33 billion
Down Volume	3.64 billion	4.32 billion

Entering the Week

Momentum is to the downside, and there was lots of scuttlebutt about a “Black Monday” today. The futures opened under pressure but not the kind of legendary sell-off sessions.

There was much talk about Buffett selling half his Apple (AAPL) stock and billions of Bank of America (BAC) shares, bringing his overall cash position to $277 billion.

There is a rumored delay of Nvidia’s (NVDA) new Artificial Intelligence (AI), the Blackwell chip, which appears to be true, but from what I could gather, it’s a three-month delay.

The Jobs Report

Many people say the jobs report was an aberration impacted by Hurricane Beryl. What’s impressive to me is that these same people never talk about the negative revisions the market always ignores.

The labor market is in trouble, and wage growth will slow dramatically.

The sell-off is a referendum on  Jay Powell and the now conventional wisdom that he and the Federal Open Market Committee (FOMC) should have cut rates last week.

Powell is loath to panic publicly. But continued turmoil in the stock market can make the coolest cat sweat. In hindsight, these are moments we live for, but in the heat of the battle, it's gut-wrenching. Hang in there, we have your back.

Today’s Session

Pullbacks are ordinary, but there should be cause for concern about the speed of current market turmoil.

We knew it would be a rough start. Here’s my ranking of contributors to this slide.

 

August 2024 Scare
1.	Jay Powell & FOMC (behind the curve)	65%
2.	Growth (economic & earnings) Concerns	20%
3.	Carry Trade Unwinding	5%
4.	Geopolitical Risks Climbing	5%
5.	Harris Poll Numbers	5%

More Than Noise

How much noise is there, and how much is legitimate messaging from markets to the powers that be? The potential disaster looming around the corner demands our immediate attention.

On Wall Street, there are steadfast rules, like listening to markets, especially the bond market. The exception is when markets go against the crowd. The crowd (also known as the smartest guys and gals in the room) typically dismisses the signals and derisively calls them noise.

Sure, in recent years noise, including the loud chatter of talking heads, has significantly impacted markets, particularly the stock market.  But nobody voices concern when the noise is pushing stocks higher despite the lopsidedness of the rally and other severe internal red flags.

The rate of decline in bond yields (the ten years down the most since 2008 coming into the session) can’t be brushed off.

The Street is now pricing three rate cuts of a total of 118 bps by the end of the year. There is also a 60% probability of an emergency rate cut before the September meeting.

Overnight the “Fear Index” (VIX) spiked 175% and is up 330% since July 1^st.

The good news is these spikes create amazing long-term buying opportunities, but the current pain can’t be ignored.

The drumbeats of war are not helping. The US sent a fighter squadron and warships into the Middle East, and there were nonstop aircraft typically used to transport military equipment out of Russia into Iran.

The true story of how oversold or vulnerable the market is will be revealed more at the close than the open.

Comments

Good Day Charles. Thank you for your stalwart commentary and thank you for giving your voice to issues many CEO guests on your show seem cavalier towards. They keep saying"the economy is great" Well, it certainly doesn't feel great from where I and many others sit. Mark Ebersole on 8/5/2024 7:30:12 AM

Thanks Mark My level of frustration is only surpassed by my level of anger. The system designed to comfort the elites cannot stand forever. Backbreaking policies that crush the middle and lower income levels are never alterneted until there are signs of it impacting the top 20%.CEOs are more honest than the economic experts that never see problems. They remind me of Wall Street analysts that buoyed the banking side of the business with rosy ratings and targets on bogus companies. CP Charles Payne on 8/5/2024 7:41:13 AM

You answered my question - the possibility of an emergency rate cut soon. Charles Lucente on 8/5/2024 9:28:44 AM

VOTE FOR TRUMP!!! Ron S on 8/5/2024 9:33:50 AM

Charles, I love your musical allegories so I'll add one. "We're going off the rails on a crazy train." Think we need a new engineer? Bill Frohberg on 8/5/2024 10:21:38 AM

Don’t succumb to fear. Thoroughly research any financial decisions and pray there is no WWIII and Trump wins in November. Kaye David on 8/5/2024 11:48:15 AM

Dear Charles, First, thank you so much for all the good you do which is a reflection of a quality character, a devotion to integrity and honesty and one who searches for the best of life. You are very much appreciated and good people like you are very hard to find, especially where money is involved. Pursuant to your question of what can be done to ward off the effects of the crazies and the elites and the globalists, one mus ask where are we and what got us here. The reason for wars that do not end and for the large manipulations of people and money begin with the ultimate money lords like the Rothchilds and people of that ilk (including the low life George Soros who is a resident enemy of America's liberty and freedom) who fund both sides to cause a balance between both waring parties producing an ongoing war. These are Godless people whose god is money and power. So, Who controls? Our Creator who has created all that can be seen and all that cannot be seen, controls what He has made. History shows multiple times that nations and countries that turn their backs and stiff necks on God pay a big price. The sins of all individuals and of nations and countries must be paid for in God's economy, not according to the whims of the Godless. Our nation is clearly under God's judgment for it's incredible self-centeredness, crime, immorality, evil, hatefulness, and iniquity. Proof is Romans chapter one which shows the steps of national degradation leading to and producing God's judgment which is severe. We first see this in the Old Testament especially in Jeremiah, Lamentations and Ezekiel where people are given the message of what God is going to do to them for their wickedness. Then you can look at the western nations where Biblical understanding and obedience took place and how God blessed them until they went Godless and have been degraded. Romans and other portions of scripture show the high cost of wrongs and the blessings of righteousness. Yes, I know people hate truth. The Bible says unregenerate peoples hearts are at Enmity with God; meaning they hate truth. All truth comes from God. So the answer to your question to how can the U.S's. quagmire in evil be turned around. It is clear the hearts of the people must change from being largely in the gutter with immorality to honoring God which takes humility, repentance and obedience to God's Word. It will take a spiritual revival for this country to be able to be blessed by God and to have the peace and joy found only in knowledge of and adherance to God's high value words. We must pray for revival in the seminaries, in the churches and in the nation. As the people go, so go families, as the families go, so go the churches, and as the churches go, so goes the nation. It is only through dealing rightfully with sin and turning from it, that real life can obtained. Jesus said, "I am come (into this world) that you might have life (life as opposed to mere existance which is where most people are) and life more abundantly". To miss this is to miss everything of real value, John 10:10. The gospel book of John is so key, so valuable and so explanatory. Bill Baumner on 8/5/2024 1:46:12 PM

Need common sense politicians and not held hostage to elitists or the global cabal Robert E Totman on 8/5/2024 5:27:28 PM

Some favorable algorithms would help. Powell cuts 1/2 and this might not push the market higher but it might stop the downtrend. Dave on 8/5/2024 8:02:36 PM

I agree with Bill's sermon, but would add Genesis 12:3 where God speaks of the treatment of Israel- I will bless those who bless you, and him who dishonors you I will curse, and in you all the families of the earth shall be blessed.” It is discouraging to see all of the dishonor by those that tear down rather than build up. Steve Grubor on 8/7/2024 11:45:55 AM

Question of the week response: Look at 10 year chart of FXI and consider the 1.5 billion (18%) of world population who live in China.If things get really ugly, grew up in place best to watch from. What if 10 years ago, your equity portfolio was 70% higher than today? Gratitude pass it on. valerie on 8/7/2024 2:02:01 PM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.