(as of 6:50 AM PST)
Sellers abound and buyers are scarce as market indexes skid broadly lower this morning. It is a 'risk off' market with most all asset classes tanking. Oil continues its dramatic fall with a barrel touching $36 and posed to go lower amidst a glut of supply. Precious metals are down as well, along with most commodities. The economic data this morning does not justify the sharp drops of up to up to 1.5% thus far. The producer price index was a good number, while the retail sales data looked solid, but a couple of external factors have investors on edge. The junk bond market is plummeting, so much so, that a large junk bond fund has suspended distributions while it attempts to liquidate. When broad markets start to suffer from liquidity traps, as junk bonds are experiencing now, it makes everyone nervous. And, of course, the likelihood of a Federal Reserve Rate hike next week is adding to the gloom. There was a term called the 'Bernanke Put' in the days prior to current Chair Janet Yellen. The 'Bernanke Put' was the theory that even in dour market conditions Former fed Chair Ben Bernanke would come to the rescue with economic stimulus and lower interest rates, setting a floor for investors. Without that buffer in place investors now are wondering where the floor might be if a correction were to take place. Stand by for more negativity and volatility as we work through these issues.
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