What I think I learned last week #55
Last week I wrote about how so many articles are including the phrase “worst since the financial crisis.” Then this little tidbit came across my desk: Citigroup’s stock has closed lower for 14 consecutive trading days, losing 24% in that time. As a former Citi employee from the financial crisis era, headlines like this bring back not-so-fond memories, such as when Citigroup stock fell below $1 ($10 on today’s reverse split-adjusted shares) after a 95% drop in one year.
Speaking of bad bank stocks, European banks have had their worst year since the Eurozone crisis, with the sector down 25% and all big banks trading below book value. In Italy, Banca Carige has lost 83% of its value this year.
This probably will not help European banks: Ver.di, one of Germany’s largest unions, has called a nationwide strike by armed drivers who transport cash to banks.
Here’s another one for the “since the financial crisis” file: US stocks had an epic rally, their best since they started the post-crisis bull market in March 2009, on the day after Christmas with the Nasdaq surging 5.85% while the S&P 500, Dow Jones, and Russell 2000 all posted gains of 4.9%. It also was the first time ever in which more than 500 stocks in the S&P 500 finished positive. How did that happen you may ask? There are 505 stocks currently in the S&P 500 and 503 of them were in the green on the day.
Just to put some finishing statistics on the day: it was the biggest post-Christmas rally for US stocks ever. By jumping 1086 points, the Dow Jones Industrial Average had its largest single-day point jump in history. Oil prices jumped 9% on the day, its biggest gain in over two years.
And it did not end there. The next day, Thursday December 27, the S&P 500 fell 2.8% at its intraday low before jumping 3.8%, closing with a nearly 1% positive return, the largest such swing to a positive finish since May 2010. It was the largest similar percentage rebound for the Dow (2.7%) since October 2011 and the biggest for the Nasdaq (3.3%) since November 2008.
This meant that the two days after Christmas saw the S&P 500 post its best two-day percentage gain, 5.9%, since August 2015.
For the year, the Dow fell 5.6%, the S&P 500 dropped 6.2% and the Nasdaq Composite shed 3.9%, marking the worst annual performance for all three indices since 2008. The small cap Russell 2000 posted a -13% return. Not even gold was a safe haven, as it dropped 2.8% for the year.
Japan’s benchmark Nikkei index has ended the year with a -12% return, posting its first annual loss in seven years as economic data show economic growth at risk. It was reported that industrial output contracted in November and retail sales slowed sharply.
China ended the year as the world’s worst performing major stock market, as the benchmark CSI 300 index finished down more than 25% for the year.
Mexico’s main stock index had its worst quarter in over 17 years by dropping nearly 16%.
Executives have been taking advantage of the stock market decline this quarter as insider stock buying surged to an 8-year high. The last time it spiked like this, it signaled a market bottom after an equity sell-off. The number of corporate executives and officers scooping up shares of their own companies has doubled in the past two months from the prior two. As a result, insider buyers are outpacing sellers by the most since August 2011. If you remember, in August 2011, the S&P 500 was flirting with a bear market with a 19% decline before rallying 10% in each of the next two quarters.
While stock markets had their troubles, December saw global bond markets enjoyed their best month in more than a year. The yield on 10-year US Treasury bonds dropped from a seven-year high of 3.26% in early November to 2.68% at the end of the year.
Finally, this is the most troubling thing that I learned last week: in Asia, the trendsetting beauty product, and now a best-seller on Amazon, is something called a snail mask. Putting a snail on your face is almost as disgusting as eating one.
And that is what I think I learned last week.