Bloomberg reports that stock orders amounting to a whopping $617 billion (yes Bilion with a B) or more than the size of Sweden’s economy, were canceled in Japan earlier today, for reasons unknown although the early culprit is that this was one of the biggest trading errors of all time. Of course, since this trade was noted, and DKed, one can assume that a major whale was on the losing end of the trade: recall that this is precisely what happened to Goldman time and again, when some errant algo caused the firm to lose millions on several occasions in 2012 and 2013. There is one tiny difference: this time it was not Goldman, and the total amount was not a few paltry million but over half a trillion dollars!
ISM Biggest Miss Since January: Orders Tumble, Employment Slides, Backlogs Contract, Construction Spending NegativeSubmitted by Tyler Durden on 10/01/2014 - 10:13
So much for the string of near record ISM prints. Oh... and the recovery too.
Yesterday's late-day weakness in stocks is continuing as US equities open this morning led by a collapse in Dow Transports and further weakness in Russell 2000. Treasury yields are also plunging with 10Y at 2.435% (back below the oh-so-important Tepper "end of the bond bull" levels). High-yield credit markets are extremely volatile this morning. USD weakness is helping commodities rally with gold and silver outperforming. VIX just hit 17.5
Dallas County Health Officials earlier noted at least one person who had been in contact with the first US ebola patient was also being tested for the deasdly virus. They subsequently backed off that statement (oddly). Governor Rick Perry will be holding a press conference later today to calm the public we are sure, but in the meantime, the CDC has issued a helpful Q&A to ensure Americans continued to fly, spend, and consume at their leisure and don't worry about the plague... “So this is real. There should be a concern, but it’s contained to the specific family members and close friends at this moment.”
It is not a good morning for Bill Ackman's Pershing Square or Bruce Berkowitz's Fairholme Capital, or the US government for that matter, of course, which happen to be the three largest investors in Fannie Mae. The reason: FNM stock, which at last check, was crashing by nearly 60%.
While yesterday's CDC press conference was factual, it was clearly very much designed to avoid panic as time and again the US public was reassured that Ebola in America was 'contained', 'hard to contract', and would 'stop here'. However, as Bloomberg reports, the man with Ebola in Dallas was initially sent home from the hospital with antibiotics after seeking treatment for an unknown illness, officials said. We know CDC has stated the need for the US to be prepared but the fact that after the patient sought medical care on Sept. 26 and was sent home with antibiotics, he returned in an ambulance to Texas Health Presbyterian two days later and was admitted, suggests US healthcare workers are not prepared for the possibilities that Ebola is here in America - Another suspected Ebola case is being evaluated at a National Institutes of Health facility, U.S. officials said, the 13th such possible infection in the U.S.
Despite Mark Zandi's promises that all is well in the US economy, ADP had dropped (and missed) two months in a row prior to today's print but a very small rise and beat this month (213k vs 205k expected and 205k previous) shows some stability. Of note is that this print is no better than the average ADP job change over the last four years. On the bright side small businesses add the most jobs while medium-sized businesses added the least. Of potential note to this somewhat 'meh' jobs data, yesterday's Consumer Confidence data showed a disappointing plunge in Jobs-Plentiful vs Jobs-Not-Plentiful which suggests Friday's all-important payrolls print may not be as exuberant as expected.
- European Bond Yields Go Negative (WSJ)
- Traveler from Liberia is first Ebola patient diagnosed in U.S. (Reuters)
- Hong Kong Protesters Step up Pressure on Leung to Quit (BBG)
- JPMorgan to face U.S. class action in $10 billion MBS case (Reuters)
- Turkey mulls military action against Islamic State (Reuters)
- Singapore Home Prices Fall for Fourth Straight Quarter on Curbs (BBG)
- Italy's Economic Woes Highlight Dilemma for European Central Bank (WSJ)
- Advanced iOS virus targeting Hong Kong protestors (Reuters)
- Fed Scrutiny of Leveraged Loans Grows Along With Bubble Concern (BBG)
- Mosquito Virus That Walloped Caribbean Spreads in U.S. (BBG)
In a striking admission that Mario Draghi's "strategy" about the ECB's Private QE future, aka ABS monetization plan, is nothing short of converting Europe's central bank into a "bad bank" repository for trillions in bad and non-performing debt, the FT yesterday reported that "Mario Draghi is to push the European Central Bank to buy bundles of Greek and Cypriot bank loans with “junk” ratings, in a move that is set to exacerbate tensions between Germany and the bank." It is expected that the former Goldmanite will unveil details of a plan to buy hundreds of billions of euros’ worth of private-sector assets at tomorrow's ECB meeting.
A quick anecdote that should quickly confirm just how broken everything is: earlier today MarkIt reported European manufacturing data that was atrocious, with both German and European PMIs tumbling to levels not seen since mid-2013, and with Europe's growth dynamo now in a contraction phase clearly signalling what has been long overdue: a European triple dip recession. So what happens? Moments later Germany sells €4.1 billion in 10 Year paper at a record low yield below 1%.... even as the Bundesbank had to retain a whopping 17.84% of the auction, the highest since June, with only €4.663 Bn in bids for the €5 Bn target, the first miss since May 21. So hurray for the central banks, boo for the economy, and as for that mythical creature, once known as bond vigilantes, our condolences: good luck figuring out what the hell just happened, and good luck recalling what a free market is.
If the European triple-dip alert was barely glowing a muted red until this morning, then following the latest German PMI data, which tumbled to 49.9 from 50.3, below the 50.3 consensus, and is the first contractionary print in 15 months, then they are now screaming a bright burgundy. And while the European recession has now clearly made its way to the core, it wasn't just Germany: French PMI continued to be solidly in a contracting phase, at 48.8, unchanged from the previous month, the overall European Manufacturing PMI also missed and declined, dropping from a flash reading 50.5 to only 50.3, which was a 14 month low, with the average PMI reading for Q3 the lowest since a year ago, and as MarkIt summarized, "Eurozone manufacturing edges closer to stagnation." Have no fear, though, Mario Draghi and his monetization of Greek Junk Bonds will fix everything!
*CDC CONFIRMS FIRST EBOLA CASE DIAGNOSED IN THE UNITED STATES, PATIENT IS IN DALLAS HOSPITAL, NEWS 8 REPORTS
*CDC DIRECTOR SAYS: `THERE IS NO DOUBT WE WILL STOP IT HERE'
The patient recently returned (via plane) from traveling from Liberia, West Africa. This perhaps explains why CDC was "taking precautions in the US" as we noted previously. And don't forget the administration's interference in Ebola treatments.