Market Crash

As The Market Crashed, The Biggest HFT Firm Made Out Like A Bandit

While FX volatility, and frontrunning mammoth central bank orders was clearly profitable to Virtu, many were wondering how would the recently public company return to its roots of making the most money in equities. Earlier today, when Virtu released its earnings we got the answer: as the chart below shows, while the market was plunging in the third quarter, Virtu was making off like a bandit, with revenue from American Equities soaring by 68% to $46 million in the quarter - the highest quarterly revenue in that category Virtu has generated in history!

Futures Flat Despite More Weakness Among European Banks, Volkswagen; Another Apple Supplier Warning

So far today's trading session has been a repeat of what happened overnight on Monday, when following a weak start on even more weak Chinese data, US equities soared on the first trading day of the month continuing their blistering surge since that dreadful September payrolls report, which as we showed was mostly catalyzed by a near record bout of short's being squeezed and covering, which accelerated just as the S&P broke the 2100 level.

China Arrests Three High Frequency Traders For "Destabilizing The Market And Profiting From Volatility"

As the crackdown against Zexi was taking place, Shanghai police also arrested 3 suspects as they cracked a case of stock futures price manipulation involving over 11.3 billion yuan (US$1.8 billion), police said yesterday in a statement. According to Shanghai Daily, Yishidun, a commercial company registered in Jiangsu Province’s Zhangjiagang City in 2012, was found to use an illegal stock futures trading software to destabilize the market and profit from volatility.

JPM Quants: The Catalyst For The October Rally Is Over; "All 4 Sectors Are Currently Long Equities"

In all, while balanced mutual funds and risk parity funds are the ones which appear to have triggered the equity rally since the end of September, the rally was amplified at around mid October by CTA capitulation. The reversal of CTAs equity exposure from a short to a long position means that all four sectors, CTAs, Discretionary Macro hedge funds, risk parity funds and multi-asset or balanced mutual funds, are currently long equities.

China's Communist Party Bans... Golf

The Chinese are known for being strategic thinkers. This goes back thousands of years to the days of Sun Tzu. Leaders don’t act haphazardly, they make long-term plans and execute in a disciplined manner. But it’s becoming pretty obvious now that the Chinese government is in reaction mode. Their system is based on a bunch of unelected policymakers sitting in a room and making decisions to control one of the largest economies in the world. But now it’s all extremely reactive. The grand plans and strategy have gone out the window, and instead they’re taking it day-by-day, making it up as they go along. To us, this is a sign of how bad things really are.

Why The Friedman/Bernanke Thesis About The Great Depression Was Dead Wrong

No, Ben S. Bernanke will be someday remembered as the world’s most destructive battleship admiral. Not only was he fighting the last war, but his whole multi-trillion money printing campaign after September 15, 2008 was aimed at avoiding an historical Fed mistake that had never even happened!

"How Would One Position For One Final Melt-Up On Wall Street"? - Here Is BofA's Answer

"It could simply be 1998/99 all over again. After all, a “speculative blow-off” in asset prices is one logical conclusion to a world dominated by central bank liquidity, technological disruption & wealth inequality. What worked back then? What rose from the rubble of 1998? How would one position for one final melt-up on Wall Street..."

The Real Trouble Begins When Rising Inequality Splinters The Elites

History supports two narratives of rising inequality leading to social disintegration and political instability: one is inequality between the top classes and everyone else, and the the other is rising inequality within the top classes. When the pie starts shrinking and there aren't enough slices to satisfy the rising expectations of the top class, the elites splinter in profound political disunity.

Who Will Be Blamed?

"... you can bet that whenever an earthquake like this happens, especially when it’s triggered by two invisible tectonic plates like put gamma and call gamma and then cascades through arcane geologies like options expiration dates and ETF pricing software, both the media and self-interested parties will begin a mad rush to find someone or something a tad bit more obvious to blame. So you end up getting every investment process that uses a computer – from high frequency trading to risk parity allocations to derivative hedges – all lumped together in one big shotgun blast"

The Economic Doomsday Clock Is Closer To Midnight

Central banks are fearful and unwilling to normalize but artificially high valuations across asset classes cannot be sustained indefinitely absent fundamental global growth. Central banks are in a prison of their own design and we are trapped with them. The next great crash will occur when we collectively realize that the institutions that we trusted to remove risk are actually the source of it. The truth is that global central banks cannot remove extraordinary monetary accommodation without risking a complete collapse of the system, but the longer they wait the more they risk their own credibility, and the worse that inevitable collapse will be. In the Prisoner’s Dilemma, global central banks have set up the greatest volatility trade in history.

Market Expectations Of A Stock Market Crash Have Never Been Higher

With VIX collapsing 10 days straight (for the first time since October 2010), one might be forgiven for thinking "everything is awesome." However, as always, the real news is in the nuance that the mainstream often misses. As VIX has plunged (complacency about 'normal' risk), Skew (which measures extreme tail risk) has exploded to its highest ever...

Leaving The Eye Of The Hurricane

"It's really beginning to 'feel' close. The first major event could happen anytime now." The coming storm promises to be the largest of our lifetime. We shall all be affected by it. A few will profit from it. Some will be mildly negatively impacted; most will be hit hard, due to being unprepared.