Archive - Oct 13, 2014

Just as we warned, liquidity was incomprehensibly low today (below normal pre-market levels during the peak of the trading day) and the intraday whipsaws were meteoric as a closed cash bond market enabled the slightest twitch in USDJPY to send S&P algos into conniptions. Biotech crashed. Trannies were ripped ridiculously higher at the open - then collapsed into correction (-11% from highs); US Airlines have fallen for 6 straight days, crashing 17% (with today's 7% plunge - driven by chatter over airborne Ebola - its biggest in over years). Tresury futures implied a notable drop in yields across the curve (10Y -7bps at 2.21%, 30Y 2.97%, and 5Y 1.45%). The USdollar closed -0.33% led by EUR and JPY strength (but AUD surged 1% extending gains after China data).  Gold ($1234), Silver, and copper all gained on the day as WTI fell once again (despite some intraday strength in the middle of the day). Stocks "flash-crashed" on very heavy volume in the last 30 mins with VIX breaking above 24 (highest in 16 months). All major equity indices are now below their 200DMA with the worst 3-day loss since late 2011.

One of the reasons why the market sold off rapidly in the last hour or so, has been news out of Boston that an Emirates flights has been quarantined at Logan Airport, where as Fox Boston reports, according to the Massachusetts Port Authority, five passengers on an a flight from Dubai were experiencing flu-like symptoms. Crews are on the ground responding to the situation. Those passengers were not in West Africa, according to the agency.

Well that escalated quickly.... a huge volume move soaked up the entire S&P 500 e-mini liquidity stack... a "flash-crash" that saw VIX burst above 23.

"So bye bye to my piece of the pie... I poured my paycheck into the Russell, Now my cash account's dry...  It's just one month from a new all-time high, And now we're right back where we were in July..."

Running a multi-billion dollar energy company isn’t easy. Just ask the executives in the corner suites of some of the energy companies that have gone bust over the years. Some, like Enron, were brought down because of insider malfeasance. A few, like ATP, blamed damaging government policies, while others went off the rails due to market forces that left the company and its shareholders flat-footed, deep in debt, and eventually broke. Here are the bankruptcies that will be etched into the tombstones of failed energy fortunes for time immemorial.

Of the 298 Bloomberg Terminal users that are currently registered with the New York Federal Reserve Board (according to Bloomberg Search), the great majority are "red" today - celebrating Indigenous People's Day we assume. However, while everyone's favorite "market intervenor" (sic), Kevin Henry, currently spearheading the NY Fed's Chicago office, remains "grey"- preferring not to share his status with the world after this - there are a few traders and analysts hard at work maintaining the status quo with "Trader/Analyst" Yan Chow appearing the most capable of holding up US stock markets without the aid of a bond market safety net.

We have recently witnessed many 'firsts' such as one of the largest storms in the Pacific, the most severe acute health risk in modern times, and a global financial system on the brink of collapse.

Despite Bank of England's Mark Carney confident overtones that policy-makers must focus on economic developments rather than worry about potential market volatility as they consider exiting stimulus, it appears the esteemed central bank is communicating 'forward guidance' on its money-printing expectations over the next decade... BANK OF ENGLAND SIGNS 10-YEAR BANKNOTE PRINTING CONTRACT WITH DE LA RUE... starting in April 2015 (when US rate hikes might start?)

According to Bloomberg, China’s vehicle sales grew at the slowest pace in 19 months in September as demand for trucks and buses slumped with the weaker economy. Total vehicle sales, which include passenger and commercial vehicles, rose 2.5 percent from a year earlier to 1.98 million units, the China Association of Automobile Manufacturers said today. That was the slowest pace since February 2013.

Also:  West African Countries Should Give People a REAL Ebola Test Before Allowing Them to Fly to the West

With the auto loan subprime bubble large enough for both mainstream media, credit reporting agencies, and the Fed itself, having no choice but to notice, one question has emerged: what is the preferred car model of subprime lessors and lenders? The answer, courtesy of Experian's "State of the Automotive Finance Market Second Quarter 2014" report, is shown below.

Swiss cheese addiction. Now have you heard everything?

A great many will rue the day when they bought into: “Pigs can fly,” “The markets are at these levels based on sound fundamentals,” “The Fed’s got their back,” and “Ebola is contained.” It is astounding just how far behind the curve many are finding themselves. Suddenly, almost everyone we meet is either doe-eyed, or worse, portraying signs of a deer stuck in the headlights. Today, everything is changing because the great masses whom many relate to as “the herd mentality” is now showing signs of great nervousness. And once this group gets spooked, it's over.