Santa's sleigh lost traction in the growing oil slick and crashed into a falling yuan. Investors recoiled in disappointment and dumped stocks. The Santa rally may be delayed until a replacement sleigh can be found. Fortunately, Rudolph was not injured but he was traumatized by the crash in high yield bonds.
The S&P gapped down -20 points at the open after China devalued the yuan again and posted a note on a website saying the currency would no longer be pegged to the dollar but to a basket of currencies. The yuan fell -.5% to a 4.5-year low at 6.45 to the dollar. This move surprised analysts since it came the week before the Fed is expected to hike rates, which would push the dollar even higher and the yuan lower.
Also pushing the markets lower at the open was news that Third Avenue Asset Management had halted redemptions on their high yield Third Avenue Focused Credit Fund. They halted redemptions because investors were fleeing at a faster rate than the fund could sell assets. Rather than sell at distressed prices the firm halted redemptions and said they would liquidate the fund in an orderly manner but it would take up to a year.
The $785 million fund had the most exposure to illiquid assets of any fund in its class. Some 85% Third Avenue's holdings are in distressed debt and that represents 12% of the fund class.
This is the first fund failure since the recession and the impact to the markets was extreme. Unfortunately, after the close Stone Lion Capital suspended redemptions on its oldest fund after being hit with "substantial redemption requests." Stone Lion capital manages $1.38 billion in distressed high yield debt with $400 million in the fund being closed.
One fund failure could be chalked up to bad management. However, the second failure on the same day is like yelling fire in a crowded theater. People will get trampled in a rush to the exits. Expect a flood of redemptions from other funds next week.
Do not look now but suddenly there is a crisis developing. There is blood in the water and the sharks are circling. Investors with cash in other high yield funds will be in panic mode on Monday and everybody will be making redemption requests to dozens of other high yield bond funds. This could be the start of a new crisis.
Before the financial crisis there was $700 billion in high yield corporate debt. Today there is nearly $1.8 trillion and a lot of that addition is high yield debt that will be under pressure next week. High Yield Statistics
In the chart below, I have contrasted the iShares High Yield ETF (HYG) in red with the S&P-500 in black. Since 2007 nine out of ten declines in HYG of 5% or more was followed by a 9% decline in the S&P. Since January, the HYG is down nearly -14%. The HYG is down -6% since the October highs.
Making matters worse is the implosion in the price of oil. Oil fell to a six-year low on Friday at $35.35 and well under the cost to produce for almost any well drilled since the recession. Energy companies are being crushed by the sharply falling cash flow and there is no end in sight until mid to late 2016. Companies are being forced to slash spending, halt drilling and layoff workers. The worst part is the high yield debt created by the energy sector. As much as 14% of the outstanding high yield debt is owned by energy companies.
Of the 35 high yield debt issuers that have defaulted so far in 2015 the energy/mining sector accounted for 57% of those defaults. Fitch Ratings expects the default rate to rise from the 5.3% at the end of October to 6-7% in the current environment. The peak was 9.7% in 1999. S&P Capital IQ quoted a recent report saying that credit quality for high yield borrowers recently hit a new low. Year to date high yield debt issuance is around $225 billion and a 13% decline from 2014 simply because the declining market has made issuance nearly impossible. New debt volume from the energy sector declined -39% compared to 2014. Nearly all the major banks have increased default reserves because of declining credit quality for energy companies and that is not even high yield. Those loans made by banks are considered decent loans.
With oil prices in free fall, those defaults are going to rise and the credit quality worsen even further. Energy companies are finally giving up on trying to conduct business as usual. Active rigs declined a whopping -28 last week to 709 with active oil rigs falling -21 to 524. We are well below the recession lows and the rate of decline is accelerating. Companies can no longer afford to drill because the oil they get in return will not pay for the wells.
The failure of OPEC to change the quota and the apparent easing of tensions between Russia and others surrounding Syria has removed support for oil prices. Even an unexpected decline in inventories of 3.6 million barrels failed to give oil a lift for more than a few minutes.
The meltdown in the high yield market and drop in equities saw investors running in a flight to quality. The yield on the ten-year treasury fell to a two-month low at 2.139% only three days before an expected Fed rate hike. That suggests the Fed has been trumped by the market and may not be able to hike rates into a potential credit crisis. You can bet there are some nervous Fed heads burning up the phone lines this weekend. Rising rates increase the cost of financing for corporations and makes them more susceptible to potential defaults.
Another problem in the high yield market is the ETFs. Multiple banks, brokerages and high profile analysts have been warning about this problem all year. The problem is lack of liquidity. High yield debt is illiquid by nature. A fund holding a portfolio of high yield investments cannot just put in a sell order and get anything close to market value. It has to be shopped and it can take weeks or even months to sell it at a fair value. However, ETF shares can be bought and sold daily as long as there are willing buyers. If everyone suddenly decides to exit their high yield ETFs and there are no buyers the price for ETF shares is going to implode even worse than the -2% drop we saw on Friday. It is entirely conceivable that we could see these ETFs decline to retest the financial recession lows.
Carl Icahn warned about this in his video back in September. On Friday he reiterated his claim that the "high-yield market is just a keg of dynamite that sooner or later will blow up."
There is no free lunch. While the zero interest rate environment created by the Fed over the last seven years may have seemed like a free lunch by everyone borrowing money for capital expenses, share buybacks and dividend payments, there is going to come a day of reckoning. The Fed put $4.5 trillion of QE into the market and to this day, they are still keeping it at that level by rolling over maturing securities into new purchases. Eventually the Fed is going to normalize rates from their current abnormally low level. The Fed has NEVER successfully embarked on a rate hike cycle without eventually crashing the equity market. There is no reason to believe that they will be able to unwind the biggest stimulus in history without causing a material market disruption. Peter Boockvar said, "Anybody that thinks the Fed can somehow extract themselves from this policy in any smooth way is delusional. When you go so far one way deep into excessive monetary policy, there's always going to be some hangover."
The potential hike expected next week is not important in itself. A quarter point is not material. The important point is that rate hikes are beginning and like a freight train they will start slow but the pace will quicken at some point in the future. Also like the train the impact will take a long time to be felt but once in full motion it will take a long time to stop if the Fed suddenly decides it acted too early and too aggressive. For this reason if the Fed does hike rates in this seriously unstable environment they will probably offer some language with the rate hike that suggests the next hike is a long way off.
Many analysts and market watchers believe the unstable markets, both credit and equity, will keep the Fed from hiking next week. The decline in the emerging market currencies is another problem for the Fed. The Brazilian real fell -2% on Friday. The South African rand fell -10% for the week. All the Asian currencies fell with the yuan on Friday.
The forecasters are about evenly divided with those expecting a hike claiming the Fed will lose all credibility if they do not hike. After the market decline over the last two weeks the Fed could lose credibility if they do hike into a market meltdown. I am just glad I will not be the one making that decision.
According to the CME's Fed Watch tool, there is an 81% chance of a hike to 50 basis points based on Fed Funds Futures.
The Fed actually caused some of the high-yield problems we have today. With rates at zero, investors were forced to take on higher risk to obtain any kind of yield on their money. Money market funds were paying nothing and CDs and similar instruments were paying next to nothing. Investors saw the 7-8% yields in the high yield markets and the lack of any material defaults in the prior years and thought, ok, I can put some money there. Those in the ETFs thought, I can exit at any time so my risk is limited. Unfortunately, there is always risk when you reach for yield.
If the Fed had "normalized" rates over the last several years, a lot of those investors would be content with the 2-3% yield they would have been getting on normal money market funds and brokerage accounts. The Fed is aware of this and while they will not actually take the blame they are desperate to hike rates so normal investors can eventually get a safe return on their money and the Fed will have some room to maneuver when the next recession appears 12-18 months from now.
On the economic front, there was some good news on Friday. The Producer Price Index for November rose +0.3% after three monthly declines totaling -1.0%. However, all the gains came from the services component at +0.5% with the goods component declining -0.1%.
Final demand declined -1.2% over the same period in 2014 with prices for goods down -4.3% over the same period. Intermediate processed goods are down -7.2% and unprocessed goods -26.6%. Core unprocessed is down -30.3% year over year. Those big numbers are the result of oil price declines.
It was hardly a surge of inflation at the producer level and the report was ignored.
Retail Sales for November rose +0.2% compared to estimates for +0.3%. Falling gasoline prices weighed on the gains and kept them from being larger. Sales excluding autos and gasoline rose +0.5%. Gasoline stations declined -0.8%, building materials -0.3%, furniture -0.3% and motor vehicles and parts -0.4%. Those were offset by a +0.7% gain in food and beverages, clothing +0.8%, sporting goods +0.8%, general merchandise +0.7%, food service +0.7% and nonstore retailers +0.6%. Excluding autos and gasoline, retail sales are up +3.6% over the same period in 2014.
Business Inventories for October were almost flat (-0.03%) after a +0.3% gain in the prior month. Analysts were expecting a +0.1% increase. The inventory to sales ratio rose again to 1.38 and sales declined -0.2%. The report was ignored.
The economics reports for the week lifted the GDPNow forecast from the Atlanta fed to +1.9% growth, up from +1.5% at the start of the week.
Consumer Sentiment for December rose slightly from 91.3 to 91.8 compared to estimates for 92.0. Some analysts were expecting more with the Moody's consensus at 94.7. The present conditions component rose from 104.3 to 107.0 and the expectations component declined from 82.9 to 82.0.
Lower gasoline prices probably offset any worries over the California terror attack.
We have a full calendar for next week but the only events that really matters are the FOMC announcement and the Yellen press conference. The others are important for the overall economic picture for Q4 as the quarter winds down but the rate hike is the key event.
Ensign Group (RNSG) announced a 2:1 split last week at the whopping high price of $49. It is rare that a company with a stock that low will split but Shenandoah Telecom did the same thing a couple weeks earlier.
BT Group completed their split on the 8th and Edwards Lifesciences split after the close on Friday. Nike is next on the list on the 23rd along with Ensign.
For the full split calendar click here.
In stock news, Towers Watson (TW) said shareholders approved the merger with insurance broker Willis Group Holdings. The merger will include a one-time cash dividend of $10 to be paid to Towers shareholders. Willis shareholders will own 50.1% of the combined company.
Adobe Systems (ADBE) reported earnings of 62 cents compared to estimates for 60 cents. This was nearly double the 36 cents in the year ago quarter. Revenue rose by +22% to $1.31 billion. Adobe said they were targeting a 20% annual growth rate through 2018 as a result of their cloud focus.
The company said it expects full year earnings to be $2.70 and revenue $5.7 billion. Analysts were expecting $3.19 and $5.93 billion. Adobe said the strong dollar was a major headwind as was the shift from one-time purchases to cloud subscriptions. Surprisingly the stock rallied 3% on the news. KeyBanc raised their price target from $90 to $110. Stephens upped their target from $100 to $115. RBC hiked from $103 to $112 and UBS from $90 to $105.
Whole Foods Market (WFM) rallied 8.6% after ITG Market Research said proprietary data indicated revenues for the current quarter were tracking towards $4.865 billion and above consensus for $4.817 billion. Same store sales were seen as -1.2% compared to estimates for -2.2%. ITG said basket growth was flat to down. I would not have expected such a big rebound from the ITG news but the stock was heavily shorted.
KMG Chemicals (KMG) reported record earnings of 42 cents and revenue of $76.7 million. That was up from 24 cents in the year ago quarter. This was the seventh consecutive quarter of double-digit earnings growth. Shares spiked +27% on the news.
Optical networking company Finisar Corp (FNSR) reported earnings of 25 cents compared to estimates for 23 cents. Revenue of $321.1 million beat estimates for $314.2 million. The company guided to earnings of 19-25 cents in the current quarter on revenue of $300-$320 million. Analysts were expecting $318 million. Shares rallied 22% on the news.
GoPro (GPRO) actually closed slightly higher on Friday despite being downgraded by Citigroup to neutral. The bank cut the price target from $75 to $22. The analyst cut earnings estimates for Q4 from 41 cents to 22 cents. Consensus is 40 cents. CLSA cut them to a sell with a price target of $26. Since GPRO is trading at $19 that did not make sense to me. Multiple analysts said the CEO's appearance on QVC selling discounted cameras was a negative indicator. "Why would he need to discount on QVC if normal retail sales were strong?"
A new camera from competitor Xiaomi YI Technology is selling for $99.95 and two reviews actually claimed it was better than GoPro in some features. Amazon Link It even has the Ambarella chips. That makes the GoPro Session 4 at $300 a tough sell. Another analyst said he did not understand the model. Once you buy one you do not need to buy another one. All that work to get a customer and then it is a one-time sale. I do not really buy that idea since I think it is addictive to some users and I am sure the "action" cameras are smashed repeatedly and require replacement. However, like any speculative product I am sure a lot of them end up on a shelf somewhere collecting dust.
Shares were up slightly on multiple analyst suggestions that Apple buy the company in 2016. Clearly, this is just wishful thinking at this point but it did cause some people to either take a new position or close their shorts. I would personally be looking for a new short entry given the signs of desperation from the CEO.
The markets are quickly moving into severely oversold territory. The 80-point drop on the S&P and nearly 600-point decline on the Dow came on heavy volume and the week closed on the lows. That is not a good sign. Art Cashin said whenever the S&P loses more than 1.5% on a Friday and closes on the lows, the following Monday is normally negative.
Friday's volume was 8.3 billion shares and 7.2 billion of that was declining volume for a 7:1 ratio. Earlier in the day is was 10:1 but there was some dip buying near the close. That was probably shorts covering ahead of the weekend. Decliners across all markets were 6,202 to 1,025 advancers. New 52-week lows spiked to 739 from 332 on Thursday. That is the highest number since the 1,029 new lows on September 29th.
The percentage of S&P stocks over their 200-day average declined nearly 8 points to 38.2% and near the lows for the quarter. Note that the percentage has been declining since July 2014.
The advance/decline line has been declining since the beginning of December and is at two-month lows.
The McClellan Oscillator is an overbought/oversold index and it is currently at the second lowest level of the year. This suggests we should be at or near a bottom for this decline. The market drop in August was much more severe and the index was only slightly lower than it is today.
The Dow Transports are leading the Dow Industrials lower. The warnings on rail car loadings and lower revenue per airline passenger mile are weighing on the transports. The contraction in the manufacturing because of the strong dollar and weak economy is pressuring the entire transport sector.
In the trucking sector average per-mile rates on the spot market declined for all three major truckload segments in November, according to data from Truckstop.com. This is the fourth consecutive month of declines. According to the Cass Freight Shipments Index, it was the worst October for shipments since 2011 and it followed the worst September since 2010. Shipments declined -4.7% month to month and -5.3% year over year. Full Article
The AAII Investor Sentiment Survey closes on Wednesday and while the market was in decline the big hit did not come until Friday. The survey saw bullish sentiment decline only 1% while neutral sentiment fell -7.7% and bearish rose +8.7%. If the market continues negative next week the numbers should be a lot more lopsided.
There is another trend that is worth mentioning. The market typically rallies on Tue/Wed into a Fed meeting. There was a study done n 2013 on what is called the "Pre-FOMC Announcement Drift." Since 1994 the S&P averages a +0.49% gain in the 24 hours before the FOMC announcement. With eight FOMC meetings a year, that is roughly a 4% gain per year on the S&P in only eight days a year.
So far in December we have had mixed results with seasonal trends. The first week was supposed to be positive and was not. The second week is supposed to be negative and it was definitely negative. Starting this week the seasonal trend is for a rally into year-end. I am reprinting the chart from the Stock Trader's Almanac that I used two weeks ago. While the early month bounce did not appear maybe we will get lucky and have a stronger than normal end of month rebound.
The S&P broke through critical support at 2,020 to close at 2,012. If Art's Friday trend is right, we should open lower on Monday and that suggests we could retest support in the 1985-1990 range as well as psychological support at 2,000.
At this point, the support at 1985-1990 is critical. A failure there could easily produce further cascade selling and take us back to the Aug/Sep lows. The drop below 2,020 gave us a lower low to go with the lower high on December 1st. In theory, this is negative but we need to take into account the calendar and the tax selling that occurs in early December. However, if the 1,985 level breaks we will be in full breakdown mode and seasonal trends will no longer be an excuse.
The Dow was ugly on Friday with more than half the components losing more than $1 and a third losing $2 or more. Goldman Sachs, the heaviest weighted Dow component lost another $5.50 and stretched its recent decline to nearly $25. This is completely contrary to expectations for a rate hike, which normally lifts banks. The Morgan Stanley layoffs and declines in trading revenue are weighing on the entire banking sector. The high-yield implosion is also impacting them because investors do not know how much exposure they have to that sector. This suggests Goldman will continue to decline.
The Dow declined to 17,230 and just above support at 17,210. There are a couple levels of support between Friday's close at 17,265 and 17,000. However, a close under 17,000 would be very destructive psychologically. Resistance is well above at 17,700.
The winners and sinners graphic below is a good example of why the Nasdaq lost -112 points on Friday. This is the top and bottom 25 out of all 3,100 of the Nasdaq stocks. Only 16 stocks gained $1 or more and the 25th largest gainer only added 65 cents. It was a massacre and there were very few survivors.
The Nasdaq Composite lost 4% for the week and 2.2% on Friday alone. The index was knocked back to just above strong support at 4,900 after touching 5,176 on December 2nd. That is nearly a 275-point decline in only 8 trading days. Last week I suggested readers might want to speculate in some QQQ calls if they could not wait for a market bottom to appear. At that time, the Nasdaq was nearing a breakout to a new high. Conditions sure changed in only a week.
We need to hope that the 4900 level holds or it could be a long drop.
The Nasdaq 100 ($NDX) did make a new intraday high on Dec 2nd at 4,739 but it was brief and sellers appeared immediately. The retest three days later topped out at 4,722 and sellers appeared immediately. Since that second attempt, the Nasdaq has only had two down days but they were both significant losers.
The FANG stocks (FB, AMZN, NFLX, GOOGL) were crushed over the last three days. This could be a prime example of tax loss selling. Investors are selling the winners to offset their losers. Eventually this will end but there were no signs of dip buying in those issues on Friday.
I would still be a speculative buyer of January QQQ calls on any rebound in the NDX and I would probably buy a dip to 4,500 even before there are signs of a rebound. The 4485-4500 support is decent and could be a bounce point.
The Russell 2000 small caps have collapsed with a -5% drop for the week. Support at 1,135 failed miserably and the index closed at 1,123 on Friday. Historically the small caps are the biggest gainers over the next two weeks. I am not holding my breath this year. The solid dive over the last seven days is very depressing and does not instill confidence.
The NYSE Composite Index ($NYA) is in free fall. This is more than likely the result of oil stocks, commodities and financial ETFs crashing. However, none of those sectors are likely to rebound next week other than possible short covering so the NYSE appears destined to retest the September lows at 9,500. That does not bode well for the other indexes.
For months, we have been preaching caution about the narrow breadth of the rally with the big cap techs leading the other indexes higher. Only 8 big cap tech stocks were responsible for 65% of the market's gains. When those stocks rolled over and were no longer supporting the market the weaker brethren collapsed. Add in the seven-year low in oil prices and commodities and the weakness spread like a virus throughout the indexes.
I have reported multiple times about the seasonal rally in the second half of December. However, I cannot remember when the Fed hiked rates in December. Typically, the December meeting is a holiday party rather than a real business meeting. The conventional wisdom is for the Fed to not rock the boat around the holidays when portfolio managers are trying to close out their positions for the year and get set up for the next year. Managers are not prepared to deal with a change in Fed policy with only one real week of trading left in the year.
This time around, Yellen and her band of brothers are determined to hike rates in 2015 and they have indicated they are likely to do it next week. That has no doubt prompted some managers to reduce their risk exposure and rebalance their allocations ahead of the event. Whether the Fed actually hikes in the face of crashing markets and a potential credit crisis is unknown. Most traders would look at the various storm clouds and bet on a pass until March or at least January.
The uncertainty caused by the Fed has crippled the equity markets all year and that is why all the major indexes, with the exception of the Nasdaq, are negative for the year. The market has celebrated recently when the Fed has made statements indicating they would probably hike rates in December. This is investors celebrating the end of uncertainty. If the Fed does not hike, the uncertainty cloud may descend upon the market again and we will get to do this dance all over again in January.
Keep your fingers crossed that the "Pre-FOMC Announcement Drift" trend returns and lifts us out of any Monday decline. Hopefully the Fed will make a market pleasing decision and the late December trend kicks in on schedule.
The quadruple witching options expiration week in December is the most bullish of the four quarterly expirations. This is another one of those seasonal trends that could work in our favor.
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Because of President Obama's constant call for more gun control, consumers are buying more guns than ever. The FBI said it conducted nearly 2 million background checks in November. That was a 23% increase from November 2014. On Black Friday alone a record 185,000 background checks were completed. Smith & Wesson (SWHC) reported strong earnings and raised guidance because of the surge in gun buying. Sturm Ruger (RGR) has rallied +22% since November 1st. The recent terrorist attacks in California have caused lines to form outside gun stores with people waiting for their turn to purchase a gun.
For the first time in 20 years, more Americans oppose a ban on assault weapons than favor a ban. Full Article
A new firearms channel called Gun TV will begin broadcasting on January 20th. Gun TV
When Keurig Green Mountain was bought out for $13.9 billion, it pushed the value of all the deals for the year to a record $4.614 trillion. That was 18,603 deals on a global basis. The prior peak was in 2006-2007 at 23,577 deals for $4.610 trillion. The next highest peak was 1999-2000. Do those dates ring a bell? What do 2000, 2007 and now 2015 have in common? Those were peaks in the market prior to recessions. While we do not know about 2015 yet I reported last week that Citigroup and JP Morgan are forecasting a 65% or greater chance of a recession in the coming months.
Andrew Ross Sorkin wrote in the New York Times that a flurry of M&A lined up with a pattern of pre recession spikes. The theory was that revenue growth was slowing, cost cutting had run its course and the only avenue left for corporations to continue to grow was to merge with someone to gain access to their customers and product lines and reduce costs even further through synergies. Sorkin quoted a Citigroup study with the same conclusions. This further suggests a recession is headed our way over the next 12-18 months. Full Article
Time for VIX puts? If the seasonal trend for the end of December finally appears, it may be time to buy some VIX puts. The VIX is rarely above 20 and only for brief periods. You can buy the January $20 put for about $2.25 today and should a rally appear and the VIX return to the $15 level we saw last week that would be a winning trade. There is no guarantee a rally will appear but after the decline we had last week there is definitely a short squeeze in our future.
It is not just the U.S. markets taking a dive. All eight of the world's major indexes are in decline. Is that a just a coincidence or a sign the global economy is fading even further. This suggests it was not just tax loss selling in the U.S. since other markets suffered the same fate. The average decline for the week was -3.18%. Full Article at DSShort.com
Bomb threats forced the closure of malls and shopping areas in four states on Saturday. The Largo Mall near Tampa Florida, the Shops at Riverside in Hackensack NJ, the the Animas Mall in Farmington NM and the Embarcadero in San Francisco were closed for bomb threats and/or suspicious packages. These stories are a good reason to shop online. Full Business Insider Article
A survey of multiple strategists by Barron's suggests the equity markets will rise about 10% in 2016. The strategists gave their reasons and a few stocks they believe will do well. David Kostin, Goldman's chief strategist believes the Fed will hike 4 times in 2016 to raise rates to 1.25% to 1.5%. Kostin's picks were Visa (V) and Alphabet (GOOGL). Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Corp. liked Disney (DIS) and 3M (MMM). Stephen Auth, CIO at Federated said Avago Technologies (AVGO) and Gilead Sciences (GILD) would be winners. Full Article
Tis the season to be an Amazon temp worker. In 2012 Amazon hired 50,000 temps for the holiday shopping season. In 2013 that rose to 70,000, 2014 80,000 and this year they hired 100,000. The average hourly pay is $12.35 an hour for a job at an Amazon warehouse picking products from the shelf and stuffing shipping boxes. Amazon uses temporary staffing firms to locate, hire and manage the workers. Amazon pays them an average of $70.4 million a week during the holiday season from Thanksgiving through Christmas. Amazon has 90,000 permanent workers at its 70 warehouses and shipping hubs.
Temp workers have hand held scanners that tell them what item to pull from the shelf and at what location. Once they scan it, the computer gives them a new item and the number of seconds it is expected to take them to complete the task. Temp workers that perform well can be offered a permanent job and move up the ranks into management.
There is a 12% chance of a Solar Superstorm hitting earth over the next decade. A storm similar to the one that narrowly missed earth in 2012 would cause $2 trillion in damage and lead to the deaths of tens of millions of people. It is not just this decade. There is a 12% chance in every decade. Eventually our luck will run out. Are you prepared to live with no electricity for several years?Full Article
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"2015 was like commuting by roller coaster. This has been one of the more difficult markets I have seen in 50 years... I have spent time and time again trying to figure out what action causes what reaction and how do things fit in. And, in the past several weeks, it really has not fit."