Archive - Aug 26, 2015 - Story

For the third day in a row, VXX - the VIX ETF - is suffering a dramatic short squeeze (which makes sense given than short interest is 64.08mm shares against 68.1mm shares outstanding). This surge is weighing on stocks which just hit the low of teh day - with Small Caps now in the red.

Not satisfied with having arrested a reporter and a prominent investment banker, China is also looking into alleged improprieties at CSRC, the regulator which runs the CSF equity plunge protection team. Meanwhile, CSRC is conducting its own investigations into multiple brokers. 

The size of Paulson's stake is unknown, however we do know that the top 20 shareholders top out at about $150 million in SYNN holdings. Assuming a $200 million Paulson stake, that means that Paulson's paper losses were likely $30-40 million today (depending on the price he build up his stake), losses which may have been booked if Paulson decided to cash out.

Iran’s oil minister says his country supports calls for an emergency OPEC meeting to explore ways to shore up the price of oil, but even without such an effort, Tehran is willing to regain its market share “at any cost.”

Google delivers its verdict...

Once again the HFTs appear to be signaling market direction, this time in VIX.

And scene: FED'S DUDLEY SAYS "WE ARE A LONG WAY FROM" ADDITIONAL QUANTITATIVE EASING

So... how far is the "away": another 5% drop in the S&P "data"? 10%? 20%? Inquiring frontrunning vacuum tubes want to know.

Comments from Fed's Dudley have sparked USD weakness as a sooner-rather-than-later rate-hike appears off the table. USD weakness drags USDJPY lower which in turn fun-durr-mentally slams US Stocks. September rate-hike odds slide to 26% from 28% yesterday...

Goodbye September rate hike. From the much anticipated Dudley Q&A:

• DUDLEY: CASE FOR SEPT RATE HIKE LESS COMPELLING
• DUDLEY: US DATA GOOD, BUT CAN'T JUST LOOK AT DOMESTIC DATA

Yes, have to also look at domestic stocks.  TSYs jumping on the news, USDJPY flattish until the algos reverse the correlation trackers so tthey can push stocks higher on this latest admission of Fed policy failure.

Following last night's huge drawdown in inventories, according to API, The DOE data shows a huge 5.45mm bbl draw (against expectations of a 3.7mm bbl draw). This is the biggest draw since early June and 2nd biggest draw in 13 months. Production data showed a 3rd weekly drop in a row (4th of last 5 weeks) but of lesser magnitude. WTI crude's reaction was an initial surge to test API-spike highs but then weakness ensued as Fed's Dudley started speaking...

"Policymakers responded to the financial crisis with easy monetary policy and low interest rates. The critics — including us — argued against 'solving a debt crisis with more debt.' Put differently, we said that QE was necessary, but not sufficient for a recovery. We are now coming to the moment of reckoning: central bankers look naked, and markets have nothing else to believe in."

Perhaps the biggest market moving event of the day, more so than the Durables data, was Bill Dudley's speech. However, at least based on the prepared remarks there is no discussion of the economy. From Bloomerg. Now all eyes turn to the Q&A which is where any questions relevant to the recent move in markets will most likely emerge.

Yesterday, we highlighted what could well have been the catalyst for the collapse late in the session. SUNE has crashed in the last two days as the hedge fund hotel which boasts such guests as Greenlight, Third Point, Glenview, Lone Pine, Fir Tree, Steadfast, Omega, York, and Canyon,  sees mass liquidations, and judging by this morning's 6% plunge in the face of a notably higher broad market, it appears the margin-call driven liquidation may be continuing if not accelerating.

Following The Dow's recent 'death cross' - when the 50-day moving average drops below the 200-day - it fell 2000 points. So will AAPL triggering its own 'death cross' warrant "no brainer" buying-the-dip or will investors remember what happened in 2012...

This is what we said on Friday afternoon when we reported that someone was aggressively bidding VIX 50 Sept calls: "what would be far scarier is if whoever is suddenly offering a nickel for the VIX Sept 50 calls actually knows something.  Because if he "does", that would suggest a market move 'Straight out of Lehman.'" Fast forward to Monday, when we had a market move that was, drumroll, straight out of Lehman indeed, and shockingly, the VIX 50 calls, which were bought when the VIX was trading at half that value, were briefly in the money!