Situations like these don’t happen very often. When they do they should be taken advantage of. Since 2016 began, indexes over the world have taken huge hits. We are now below the Black Monday August 24th lows on the S&P 500, though both the Nasdaq and the Dow Jones have stayed above them.

There is little to no fundamental reason for US stocks to fall at this time. The economy is slowly floating along, unemployment is still low, there have been no serious shocks from the first Federal Reserve interest rate hike, and most importantly, there are about $331.4 billion more dollars in the banking system than there were back during the August crash. That means stocks are at about the same levels with $331.4 billion more in extra cash about to move in.

Most US gaming stocks have done worse than the S&P 500 since January started. MGM, Boyd, and Penn are all down by double digit percentages. Lowly Caesars is down over 17%. Pinnacle Entertainment and Eldorado Resorts are outperforming the broader market, down about 5% each. The big question is of course why is this happening now?

It’s not the December rate hike or the prospect of further rate hikes this year. That is all nonsense. The only way that rate hikes can affect stocks long term is by slowing down the growth of the dollar supply. That is not anywhere near happening. In fact, we got a pretty good idea of what the first rate hike actually did in last week’s Aggregate Reserves H3 Report out of the Fed. This differs from the Money Stock H6 report, which measures actual money in the economy ready for spending. Aggregate Reserves measures the total amount of reserves all Federal Reserve member banks have on their balance sheets, whether or not the money is circulating. Last week, total reserves fell from $2.53 trillion to $2.28 trillion. That’s a draining of $256 billion in banking reserves, and it happened at the same time as the rate hike.