Stealth Mother of All Rotations
In the same day, you had the biggest sell off in the second largest sector in the stock market and watched it rotate into the largest sector. At the end of the day everyone is happy even though billions and billions and billions of dollars was lost in Health Care.
The funny part is that there will be articles written about how housing benefitted from the Fed injecting liquidity into the markets. Nonsense.
HB stocks are part of Financial ETFs and indexes. When billions rotated out of Health Care indexes and into financial indexes, the rising tide flowed into HBs....at least for today. This on a day when the news for HBs was terrible between HOVs joke of a conference call and TOLs warning about its defaulting JVs potentially causing big losses.
The problem is that the issues facing health care and housing are protracted fundemental problems. The reaction in financials was an emotional one not likely to stick very long. Just wait until inflation data comes out later this week.
Fundementally our economy is eroding rapidly. Truckers are pulling their trucks off the road because they can't afford to haul goods at current rates. Brokers are having a tough time finding equipment to move goods. Today, Northwest Airlines said the airline business model cannot be sustained with oil above $105....it is approaching $110.
I know who cares about shipping goods or airlines. But with the interest going UP the most today in over ten years, now that is something most of us can relate to. That is really going to make housing much more affordable. What, taking over toxic debt is going to free up banks to issue more toxic debt at higher rates? Not a chance. It only allows the banks to keep their doors open so they can give us back the little of our devaluing deposits we have left.
Layoffs and job reduction really starting to pick up. Debt defaults continue to rise. Forclosures continue to rise. Retail Sales continue to fall. Truckers shutting down. Airlines can't operate profitably. Auto sales falling. Construction contracting. Commercial RE vacancies up and values falling. Investment funds liquidating. Insurance profitablility evaporating. Banks losing billions. Banks failing. Municipalities going bankrupt. Technology sales slowing. And now Health Care getting squeezed.
Other than defense and commodities, is there anything positive?
Thank goodness we are not heading into a recession.