Tuesday, February 6, 2018

Rick Bookstaber — Not Wages. Not Inflation. Volatility. ETFs.

The recent tumble in the market is being attributed to the wage report, a rise in interest rates, and concern about inflation. A reassessment of economic conditions does not lead to such a violent reaction. It might give a push, but then gravity does the rest. For the markets, gravity is the technicals -- how leveraged or overextended investors are, how concentrated, and how much liquidity there is in the face of a flood of selling.
This is just a quick recap of a couple of posts I have done over the past months that relate to technicals behind the current market downturn.
Rick Bookstaber Blog
Not Wages. Not Inflation. Volatility. ETFs.
Rick Bookstaber | Chief Risk Office for the Office of the CIO at the University of California

See also
While the labor share - the part of national income paid to workers—has recently continued its decades-long decline, US corporate profit margins have risen further to historic highs, especially for the most profitable firms. Over the last two decades, most industries have also become more concentrated with a few large firms earning a larger share of revenue, potentially shifting the bargaining power from consumers and workers to firms and employers.
As the chart above shows, average wage growth has fallen from 3.5% in 1985-2007 to 2.1% in 2008-2017. While much of the weakness in wage growth over the last decade relative to pre-crisis norms can be attributed to cyclical labor market slack and soft price inflation, longer-run declines in trend productivity growth and in the trend labor share are currently still weighing on wage growth.…
Zero Hedge
Goldman Exposes America's Corporatocracy - Wage Growth Is Slowing, Not Rising
Tyler Durden


The VIX scam.

Armstrong Economics
VIX Losses Feeding Collapse
Martin Armstrong

  • The last day of trading for VelocityShares Daily Inverse VIX Short-Term exchange-traded note (XIV) will be Feb. 20, according to Credit Suisse.
  • The XIV security, which had fallen roughly 85 percent in after-hours Monday, resumed trading Tuesday afternoon down 89 percent before being halted again.
Credit Suisse says it will end trading in the volatility security that's become the focus of this sell-off
Thomas Franck

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