Russell 2000 Collapses To Negative Year-over-Year For First Time Since 2012

From a 40%-plus year-over-year in late Dec 2013, the Russell 2000 small-caps index has just passed a crucial milestone to trade negative year-over-year. This is the first time since mid-2012 that small-caps have been under-water year-over-year and what saved them then was the promise of QE4EVA...

Japanese Stocks Have Crashed Over 1000 Points Since Friday

After ticking just above 110.00, USDJPY has been a one-way street lower and that means only one thing... Japanese stocks are cratering. From Friday's highs, The Nikkei 225 has crashed over 1000 points (despite Abe's promises yet again of more pension reform buying of stocks). Of note, perhaps, is that, Japanese investors bought a net $3.6 billion of foreign stocks last week - the most since January 2009 - perfectly top-ticking global equities... Well played Mrs. Watanabe.

ECB's Asset Monetization Advisor Says There Will Be No Full-Blown QE

What one can not exclude is that Blackrock, having worked with the ECB for an indefinite period of time, is intimately familiar with the long-term strategy of the biggest jawboning back in the world: Mario Draghi's ECB. Because while Draghi will say anything, as he started two years ago with his infamous "Whatever it takes" speech, his actual policy options are painfully limited. It is in this context that all those betting that public, US-style, QE will inevitably follow the private QE which is set to last at least two years, may want to sit down and read the following note from Reuters, which warns "investors loading up on some of the euro zone's riskiest government bonds on expectations that the European Central Bank will buy them are making a mistake" according to none other than BlackRock's head of European and global bonds said on Wednesday.

European Stocks Plunge Most In 16 Months As Draghi Disappoints

Broad European stocks plunged into the red for 2014 today as a rattled Mario Draghi disappointed a hungry-for-more risk market. Bloomberg's BE500 index dropped its most since June 2013 to 2-month lows led by weakness in Italian banks. UK stocks underperformed (-3.6%) but Spain, Italy, and Portugal all tumbled 2-3%. The selling pressure interestingly stayed in stocks as bond spreads rose only modestly and EURUSD roundtripped to only a small rise from pre-ECB. Notably, US equities are cratering as they are so used to the pre-EU-close pump that did not happen.

Art Cashin Warns "Stay Wary" As S&P Sits At Critical Support

It "all depends on Draghi," warned UBS' Art Cashin early this morning... and Draghi disappointed. Historically October 2nd, Cashin notes, usually sees a rebound but payrolls may complicate that pattern (and rumors that ISIS is consolidating west of Baghdad). Stick with the drill, he advises – "stay wary, alert and very, very nimble," as the 120-day moving average (1945 on Cash S&P) is critical...

"I Lied To Get A Loan, And Now It Is Forgiven" - UK's Largest Payday Lender Just Wrote Off 330,000 Loans

While the Obama administration is furiously scratching its head how to write off the debt of a few hundred million Americans, so they can once again load up on debt from scratch, spend like drunken sailors, and blow up the system once more, others are already a few steps ahead, such as UK's largest payday lender, the Wonga Group Ltd., which we learn today has written off the debt of 330,000 customers after British regulators introduced tougher rules to "protect consumers" such as Master Elliot Gomme, 20, who admits he lied to get a loan: "the 20-year-old admitted lying on his application and told Newsbeat it was "too easy" to be accepted."

American Ebola News Wrap: Up To 100 Potential Cases In Texas, 1 In Hawaii


Despite promises by all asunder that any Ebola epidemic in America will be "contained" the dreadful news this morning appears to confirm this is not the case. From one patient, Eric Duncan, just 2 days ago, to 4 schools and 18 people yesterday (according to Texas Governor Rick Perry) to today where NBC News has confirmed with the Dallas county health and human services that 80 people came into contact with the Dallas Ebola patient or his family (including 12-18 direct). The ambulance workers are also under close watch after Duncan vomited on the ground outside an apartment complex as he was bundled into an ambulance. In addition, CBS is reporting one possible Ebola patient in isolation in Hawaii. Contained? Perhaps it is time to rethink the ethics of disease control once again.

August Factory Orders Miss, Plunge Most On Record

Surprised? Following last month's 10.5% record rise in Factory Orders, August just printed -10.1% MoM - the biggest drop on record. While some give-back was excpected this is notably worse than the expected drop of -9.5% (the biggest miss since January 2014). Worse still durables orders cratered 18.4% (and non-durables dropped 0.4%) MoM and ex-transports dropped 0.1% - the 3rd drop in the last 4 months. So - in summary - last month saw a $56 billion rise and this month saw a $55.8 billion drop - 'economic growth' roundtripped... as inventories rose 0.1% and shipments fell 1%.

ECB Releases Full Details Of Its "Private QE" Program

  • Programmes will last at least two years
  • Will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation
  • Eurosystem collateral framework is guiding principle for eligibility of assets for purchase
  • Asset purchases to start in fourth quarter 2014, starting with covered bonds in second-half of October

Global Markets React (Badly) To Draghi's Disappointing Nothing-Burger

Extending current programs (i.e. no imminent Sovereign QE)... may not spend the entire EUR1 trillion on current programs... no rate change... Markets are not happy. EUR is surging, European stocks are dropping, European peripheral bond risk is rising. Treasuries are bid and US equities have dropped to yesterday's lows.

Mario Draghi's "All Talk" ECB Press Conference - Live Feed

We look forward to more jawboning, more promises, and more hope that fiscal policymakers enact reforms as ECB chief Mario Draghi explains how doing nothing on rates (they are at the limit) and QE (zee Germans) is still the most dovish thing because they might possibly maybe kinda sorta do it in the future...

Deutsche Bank Asks: "Are We Understanding More About How Addicted Markets Have Been To QE"

"With the recent weakness in risk, are we understanding more about how addicted markets have been to the Fed's QE? Or is this just a temporary unrelated blip? The Fed will turn off the QE tap later this month and in our opinion volatility has been increasing as the market adjusts. We've long felt that the Fed pulling back from QE would be an issue for markets and it’s tempting to be bearish here."

ECB Keeps Rates Unchanged

Unlike last month, when in an act of futility and desperation, the ECB pushed NIRP into NIRPer territory, this time the ex-Goldmanite in charge of Europe's money printer decided not to antagonize Germany further, and to do nothing.

Frontrunning: October 2

  • As we warned in May 2013... Gross Exposes $42 Trillion Bond Market’s Key Flaw in Exit (BBG).... hint: no liquidity
  • WTI Crude Slips Below $90 for First Time in 17 Months (BBG)
  • Traders Thank Fed for Once-in-Decade Surge in Profit (BBG)
  • Islamic State committing 'staggering' crimes in Iraq: U.N. report (Reuters)
  • Philippine Islamist militants threaten to behead German on October 17 (Reuters)
  • Draghi’s Buying Spree for the ECB Might Start Modestly (BBG)
  • Russian Officials Say No Plans for Capital Controls (WSJ)
  • Indians Join the Wave of Investors in Condos and Homes in the U.S. (NYT)
  • Leader of Mexican drugs cartel captured (FT)
  • Dallas Ebola patient vomited outside apartment on way to hospital (Reuters)

Futures Flat As Japan Tumbles, WTI Slides $90 For First Time In 17 Months

While we already documented the crash in Japanese stocks earlier, the biggest market development overnight is the plunge in crude, with both Brent and WTI plunging, the latter sliding under $90 for the first time in 17 months, extending yesterday's selloff after Saudi Aramco cut Arab Light OSP in Asia to 2008 levels. Brent drops to lowest since June 2012. This also confirms that the global slowdown whose can is kicked every so often in a new bout of money printing, is arriving fast. That, and the imminent crackdown on today's Hong Kong protest will likely be the biggest stories of the day, even as the spread of Ebola to the US is sure to keep everhone on edge.

Meanwhile In Hong Kong "Tonight Is Going To Get Messy"

"Crowds pin police against wall, shouting "you can not enter". Police shuttling in huge wooden crates. More gas tonight?!... Wow, crowds surging. Police trying to maintain supply line. Protesters are gearing up for gas - goggles are being passed around.... Police are carrying a boxes labelled "batons" and metal "flammable" tins. Tonight is going to get messy." - SCMP's Bryan Harris