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Indeed, the Standard & Poor's 1500 index—a broad basket of large, mid and small company stocks—shows that the average stock's distance from its 52-week high is 26.9 percent, according to stats compiled by Bespoke Investment Group through Friday's close."That's bear market territory!" says Paul Hickey, co-founder of Bespoke Investment Group, the firm that provided USA TODAY with the gloomy price data.
Here's a statistical damage assessment, provided by Bespoke Investment Group, of the pain being felt by the average U.S. stock in the S&P 1500 index:* Large-company stocks in the S&P 500 index are down 22.6 percent, on average, from peaks hit in the past 12 months.* Mid-sized stocks in the S&P 400 index are sporting an average decline of 26.5 percent since hitting 52-week highs.* Small stocks in the S&P 600 index are the furthest distance away from their recent peaks. The average small-cap name is 30.7 percent below its high in the past year.
And then there's energy. The dramatic decline in crude oil prices rocked the energy space. The average energy stock is now down a whopping 52 percent from its 52-week high, according to Bespoke. The only thing worse than that is small-cap energy, which is down 61 percent.
I remain convinced that the U.S. financial markets, particularly equities and low-grade debt, are in a late-stage top formation of the third speculative bubble in 15 years.On the basis of the valuation measures most strongly correlated with subsequent market returns (and that have fully retained that correlation even across recent market cycles), current extremes imply 40-55 percent market losses over the completion of the current market cycle, with zero nominal and negative real total returns for the S&P 500 on a 10-to-12-year horizon.These are not worst-case scenarios, but run-of-the-mill expectations.
Looking at International Monetary Fund data, "the year-over-year change in global exports is at the second lowest level since 1958," Raoul Pal, Publisher of the Global Macro Investor told CNBC's "Fast Money" this week.Basically, it means economies around the world are shipping their goods at near historically low levels. "Something massive is going on in the global economy and people are missing it," Pal added.The steep decline in 2015 exports is second only to 2009, when the global recession led to a 37 percent drop in export growth.
The so-called smart money is pulling back from market risk, with fund managers taking down exposure to stocks, increasing cash holdings and buying protection against a sharp selloff.
Earlier in the year margin debt had risen over $30 billion or 6.5 percent to $507 billion and was equal to a record 2.87 percent of U.S. GDP. This surpasses the previous all-time high of 2.78 percent set in March 2000—the top of the last largest stock market bubble in history.And despite the assurance of every mutual fund manager on TV that they have boatloads of cash ready to deploy at these "discounted" levels, in early August cash levels at mutual funds sank to their lowest level in history, 3.2 percent (see chart below). As a percentage of stock market capitalization, fund cash levels are also nearing the record low set in 2000 when the NASDAQ peaked and subsequently crashed by around 80 percent.
Robert Johnson, president of the Institute of New Economic Thinking, told people at the World Economic Forum in Davos that many hedge fund managers were already planning their escapes.He said: "I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway."
His comments were backed up by Stewart Wallis, executive director of the New Economics Foundation, who when asked about the comments told CNBC Africa: "Getaway cars, the airstrips in New Zealand and all that sort of thing, so basically a way to get off."If they can get off, onto another planet, some of them would."
New Zealand, which is about the size of the U.K., but has a population of just 4.4 million, offers them all the modern luxuries they have come to expect—but miles from any country which may implode into chaos.The country is 11,658 miles away from the U.K., while its closest neighbor is Fiji—1,612 miles away, more than double the distance between Lands End and John O'Groats.Homes at the top end of the market come with tennis courts, swimming pools and media rooms—and some even boast their own personal jetties where a family can moor their boat.But the icing on the cake for those looking to make a quick escape comes in the form of private helipads or, better, your own airstrip.
Newly released August records show that the FBI posted 1.7 million background checks required of gun purchasers at federally licensed dealers, the highest number recorded in any August since gun checks began in 1998. The numbers follow new monthly highs for June (1.5 million) and July (1.6 million), a period which spans a series of deadly gun attacks—from Charleston to Roanoke—and proposals for additional firearm legislation.
