It would appear The Fed is in panic mode. According to two "people familiar with her comments" - who asked not to be named because the meeting was private last weekend:
- *YELLEN SAID TO VOICE CONFIDENCE IN EXPANSION AMID FOREIGN RISKS
Of course, this is now the last thing that markets want to hear since it means she is less likely to unleash QE4.
Last week we hinted at what was to come as Ebola fears spread across America. Today, we get confirmation. As The Daily Caller reports, one passenger at Dulles International Airport outside Washington, D.C. is apparently not taking any chances. A female passenger dressed in a hazmat suit - complete with a full body gown, mask and gloves - was spotted Wednesday waiting for a flight at the airport.
The health-care worker was not identified by public health officials, but family members told Reuters and the Dallas Morning News that her name is Amber Vinson, a nurse at Texas Health Presbyterian Hospital. She was part of a team that had cared for Thomas Eric Duncan, a Liberian man who flew to Texas and was diagnosed with Ebola last month, during his hospitalization in Dallas. Duncan died last week. Nina Pham, a nurse who also cared for Duncan, was diagnosed with Ebola on Sunday.
From 17,350 intraday highs "proving the recovery is here," we are 1500 points down just 3 weeks later. The Nasdaq just fell 10.5% from its highs, officially in correction. VIX broke above 30. Perhaps, just perhaps, the gap to fundamentals is finally about to be filled...
But, but, but they said it wasn't contagious unless you came into contact with bodily fluids. According to the CDC, the 2nd health-care worker infected with Ebola traveled on Frontier Flight 1143 from Cleveland to Dallas on October 13th and are asking all 132 passengers on the flight to get tested. One question... what about the thousands of people that those 132 passengers came in contact with in the last 2 days?
One would think that in today's abysmal tape, where as many have described the market moved in a way that has never been seen before, the most hated, most flawed, and thus most shorted stocks would be crashing far worse than the broader market. Well, no. Because here, once again, we get a great lesson in practical liquidity management. As the margin calls start to trickle in - and just wait until 3 pm when it will be a full blown margin call massacre - hedge funds are forced to release margin. They do that by covering all those stocks which they and their peers entered en masse as the most shorted hedge fund names.
Desk chatter confirms liquidations are occurring ahead of expected margin calls later in the day. This is evident in widely held stocks like AAPL which just plunged on very heavy volume and has dragged the "off the lows" bounced US equity indices back to their lows of the day...
You know its serious when President Obama cancels a fundraising trip to discuss Ebola. With the 2nd Ebola-infected healthcare worker having traveled around America symptom-free, we suspect Dr. Frieden will have a lot of calming down the public to do...
Despite manufactured earnings reports that apparently 'beat' US financial stocks are the worst performer today and down 9% from its highs in mid-September. Today's drop in XLF - the Financials ETF - is the biggest since Nov 2012, and is red for 2014 now. Of course, this should not be a total surprise since US financial credit spreads have been flashing a much less exuberant tone for a few weeks...
Greece (-6.5% today), Italy (-4.4%), Spain (-3.6%), and Portugal (-3.2%) all saw major stock price collapses today dragging the broad European Stoxx 600 index down 11.4% from its highs just 18 days ago... All European stock indices are now red for 2014
BOTTOM LINE: Business inventories rose less than expected in August. In light of the disappointing September retail sales report and slower-than-expected inventory growth in August, we reduced our Q3 GDP tracking estimate by three-tenths to +3.2%. We also moved our Q4 GDP forecast down a quarter point to +3.0%.
Remember that in addition to its primary function, which is to push stocks higher i.e., the "wealth effect", the Fed's Quantitative Easing has another just as important role: to monetize the US deficit. Which is why the news that was released moments ago from the Treasury, namely that the US deficit for Fiscal 2014 has just fallen to a meager $483 billion, or 2.8% of GDP (mostly thanks to the GSE inbound receipts which in turn were courtesy of the latest dead cat bounce in housing), and down from $680 billion a year ago, is hardly what the BTFDers were hoping for.