Ebola in NYC, no problem. Crappy housing data, all good. School shooting in WA, buying opportunity... and that is how the S&P 500 broke back above its 100-day-moving-average (proving the world is fixed again), and had its biggest low-to-high swing since Dec 2011. It wasn't all great BTFD news today though as small caps underperformed - though still green (just like last Friday), and only Trannies and Russell are green in October. Despite equity exuberance, Treasuries rallied modestly today (ending the week up 8-9bps on the week). HY credit slightly underperformed stocks but compressed 27bps - the biggest weekly drop in spreads since July 2013. The USD rose for the first time in 3 weeks led by JPY and EUR weakness. Oil fell once again, copper rose (since China data), gold and silver mirrored USD's gains. VIX closed down 5 from last week's close just above 16, but like small cap, and JPY carry, decoupled this afternoon. The last 2 weeks were the biggest squeeze of "most shorted" stocks since July 2013.
"Ebola seems like a lame excuse, frankly, but it’s a widespread one. Assuming that everyone in the market has above-average intelligence we don’t think they’ll trade Ebola headlines" - CRT's David Ader
If there was one theme from last night's Cuomo/De Blasio Ebola press conference it was 'how everyone has been preparing for months' for Ebola. We can all be reassured, right? Wrong! As The Daily Mail reports (and these stunning photos show), the police officers involved in securing Dr. Spencer tossed their gloves, masks and the caution tape used to block off access to his apartment in a public trash can.
When markets broke on Wednesday, XIV soared, stocks followed and the volumeless levitation was praised by all as evidence that the world was once again fixed. Yesterday we also saw NYSE Euronext 'break' into the European melt-up close, and later that day, as Ebola headlines hit, the market once again broke numerous times with various exchanges declaring self-help against one another as stocks tumbled on heavy volume. If you are wondering how it is that "the great stock markets in the world" can break so often (and be so ignored by financial media), Nanex exposes the act... as massive quote spamming yesterday sent OPRA to full capacity (broke the efficient flow of data in markets) 13 times...
In essence it’s all just a pretend game, and the fish in today’s investment world are probably far more aware of their own identity than the fish at a real life poker table. But it doesn’t matter. They’re still fish, and everybody knows they’re going down. And therefore so are your pensions and your other institutional investments. What are they going to do, stop playing? They can’t. So who are the solid players in this game, you ask? Why, Wall Street, of course. They’ve had their eye on your remaining cash all along.
There is a large police presence at Marysville-Pilchuk High School (Marysville, WA). School officials said there is an emergency situation at the school and the building is locked down. Three students and a teacher reported hearing gunshots. Airlift Northwest confirms that they are transporting two patients, but didn't give more information. Video shows students evacuating the building and multiple police, fire and medic units..."Our son just called to let us know that his kids are ok - his son was about 50 feet from the shooter - a student that he knows."
This is what Jeff Bezos' value creation looks like.
This state of delusion would be amusing if it wasn't so tragic. The acid will wear off soon enough, and a mega-dose of vitamin C will not be enough to restore the shattered health of a manic, drugged-out market careening between euphoria and fear.
While JPM's eligible gold holdings are nowhere near the record lows hit in the summer of 2013, when they dropped to a tiny 46K ounces, sparking concerns of a potential deliverable default, yesterday according to the daily CME gold depository report, JPM saw a whopping 321,500 ounces, or about 10 tons of gold, withdrawn. This was the biggest outflow since the August 5 rebalance when nearly 1.5 million ounces were withdrawn and added, and was the biggest, and is tied with two identical 321,500 oz outflows recorded in early January. As of yesterday, JPM's eligible gold tumbled by 40% in one day, declining to 485.K ounces from over 800K the day before: the lowest eligible gold inventory since almost exactly a year ago.
France's President Francois Hollande states confidently that "everyone should respeoct treaties," then 'Junckers' it with this stunningly hypocritical bullshit, "budget rules must be adapted" to support growth and France "has done what it has to do" on its deficit... one glance at the following chart suggests that Hollande has done nothing and has been enabled by Draghi... What a farce!!
Recapping the tenets we presented here, here, and here, once an economy is subjected to a bout of monetary inflation, whether that be via direct central bank money creation or via money (and credit) creation by the fractional reserve banking system, an unsustainable, artificial economic boom is born, whereby malinvestments (bubbles if you like) are created that sooner or later must be liquidated. And whether that bust takes the form of a hyperinflationary bust or a deflationary bust, bust we will get.