Anyone else get a sense of deja vu? Following CBOE's fail this morning, now BATS and NASDAQ have declared self-help against the CBOE...
- *CBOE HAS NO FURTHER COMMENTS REGARDING ITS COMPUTER SYSTEMS
- *CBOE INVESTING CURRENT DIFFICULTIES, SPOKESPERSON SAYS
As of 10:02AM CT, *CBOE’S C2 AND CBSX HAS HALTED TRADING
- U.S., Russia to push for new Syria peace talks (Reuters)
- Elite Syrian Unit Scatters Chemical Arms Stockpile (WSJ)
- Obama to nominate Summers as Fed chief: Nikkei (Reuters)
- Boehner Wants Joint Talks on Debt, Budget (WSJ)
- House Republicans go for broke in fiscal battles (Reuters)
- Pimco, BlackRock Together Received More Than a Quarter of Verizon's $49 Billion Bond Deal (WSJ)
- Insane financial system lives post-Lehman (Gillian Tett)
- JPM to add $2.5 billion to its litigation reserves in the second half of the year (WSJ)
- Goldman’s Zurich offices visited over working-hours complaint (FT)
- Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
- Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
- Five years after Lehman, risk moves into the shadows (Reuters)
- U.S. shares raw intelligence data with Israel, leaked document shows (LA Times)
- Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
- Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
- Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
- Brussels probes multinationals’ tax deals (FT)
- Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
- Tablet sales set to overtake PCs (FT)
- The end of angst? Prosperous Germans in no mood for change (Reuters)
Stanley Druckenmiller's World View: "Catastrophic" Entitlement Spending, "Bizarre" & "Illusory" Asset Markets, & Beware The TaperSubmitted by Tyler Durden on 09/11/2013 20:50 -0500
During an extended interview with Bloomberg TV, billionaire investor Stanley Druckenmiller provided a seemingly fact-based (and non-status-quo sustaining, commission-taking, media-whoring) perspective on a very wide variety of topics. The brief clips below touch the surface, with the detailed annotated transcript below providing details, as Druckenmiller opines on the looming catastrophe in entitlement spending "when you hear about the National debt being $16tn; if you actually took what we promised to seniors and future taxes, present value to both of them, that number is $200tn," why the Fed exit will be a big deal for markets, "it is my belief that QE has subsidized all asset prices and when you remove that, the market will go down," and his changing views on Obama "I was drinking the hope and change Kool-aid... in hindsight, he probably needed more experience for this job." Looking back to the financial crisis, he warns, "...a necessary condition to have a financial crisis, in my opinion, is too loose monetary policy that encourages people to take undue risk and go on the risk curve and do silly things. We should have shut this down in 1998, 1999. The NASDAQ bubble, we should have raised rates, we didn’t. Then we got the implosion."
Despite earlier comments from Obama on Tuesday night, who called for a pause in authorizing military strikes on Syria, which led to another drop in crude prices overnight, the drop has since reversed and both WTI and Brent Crude contracts are trading in the green. Whether this is the result of a note by Goldman analysts who noted that the Brent crude sell-off was overdone and that they see no improvement regarding the conflict in Libya which is constraining oil production, or because Russia is once again throwing hurdles in the international process to force Syrian disarmament, is unknown. The lack of any key catalysts and no USDJPY levitation, led to most global markets unchanged, and futures currently trading sideways. What is not trading sideways is Apple which is down over 2% to just over $480 as all hopes of a China Mobile deal fall apart, coupled with pervasive critical panning of the new iPhones which, aside for the commodity version, is just the old iPhone with an extension that allows the NSA's new fingerprint database to be filled in record time.
As long as you ignore AAPL, today was a good day for all the bright shiny happy people who own stocks. Trannies finally snapped higher catching up to the other major indices with their best day in 6 weeks, Nasdaq closed at its highest since Nov 2000 (despite selling off for the afternoon as AAPL disappointed with pretty colored plastic stuff) with a 6-day winning streak. All sectors are now green post-Kerry's 8/36 speech with homebuilders surging from worst (-4%) to first (+2%) in the last few days. The exuberance (if not the volume) is palpable. Hedgers were once more disabused as VIX collapsed and stock indices close well above technical levels. The USD did absolutely nothing even as AUD sold off for most of the day. Treasuries were smashed higher in yield after diverging lower in yield from the open through lunch. 10Y was oddly correlated to AAPL's drop as the yield pushed up to 2.97% (and AAPL fell 2.4% by the close). Silver and Oil were hammered lower (-3.75% and 3% respectively from Friday) though we note Gold (which is down 1.9% from Friday) pushed higher from the US day session open today. All-in-all, the equity market seems convinced that Europe, China, and Japan are all good and Syria is a dud (oh and Taper - who cares!)
An impressive chaotic day in stocks and bonds as both markets appeared confused as to whether jobs bad news was good, if the jobs bad news was bad enough, and if Syrian bad news was actually good news in holding off the Taper a little longer. The Dow seemed the trigger for all things today as the collapse on Putin's statement slammed the Dow into the red for the week (which would have made 5 weeks in a row, something we haven't seen since the US downgrade in 2011). That was clearly unacceptable to someone, and the Dow soared 220 points on no news whatsoever to break the all-important "Mission Accomplished" level of 15,000. Once that farce was over, we started to fade and then on news of Syrian government "gas" shelling, we tumbled back into the red (with the Nasdaq and S&P practically unchanged again). Treasuries rallied off their just-greater-than 3.00% yields with their biggest intraday plunge in yields in weeks on a slow-growth (or Taper-off) bid exaggerated by Putin's comments, only to sell-off back to pre-Putin by the close. Gold, Silver, and Oil (highest clsoe since May 2011) all surged not looking back after the jobs and Putin news.
- BOE Leaves Policy Unchanged as Carney’s Guidance Assessed (BBG)
- Surprise or not, U.S. strikes can still hurt Assad (Reuters)
- Samsung Gear: A Smartwatch in Search of a Purpose (BusinessWeek)
- 'Jumbo' Mortgage Rates Fall Below Traditional Ones (WSJ)
- Capital Unease Again Bites Deutsche Bank (WSJ)
- Technical snafus confuse charges for Obamacare plans (Reuters)
- JPMorgan subject of obstruction probe in energy case (Reuters)
- U.S. Car Sales Soar to Pre-Slump Level (WSJ) - i.e., to just when the market crashed
- BoJ lifts assessment of Japan’s economic health (FT)
- Dead Dog in Reservoir Helps Drive Venezuelans to Bottled Water (BBG)
- Russia Boosts Mediterranean Force as U.S. Mulls Syria Strike (BBG)
Nearly four years after Zero Hedge first suggested an HFT tax should punish algos that "churned" quotes and blasted empty bids and offers to stimulate "momentum ignition" strategies, and generally corrupt market structure in a way that lead to both the flash crash, the BATS IPO farce, the FaceBook IPO debacle and the Nasdaq 3 hour crash, the first such tax is now a reality. And while it is not, and likely never will be implemented in a major (if declining) exchange such as the NYSE or Nasdaq, the first country to finally put an end to millions of parasitic empty quotes is Italy.
- Al-Qaeda Links Cloud Syria as U.S. Seeks Clarity on Rebels (BBG)
- Administration Tells Lawmakers of Evidence Linking Assad to Attack (WSJ)
- Director of National Intelligence James R. Clapper to publish numbers of secret spying orders (CBS)
- U.S., Switzerland strike bank deal over tax evasion (Reuters)
- Another Budget Deal Bites the Dust (WSJ)
- Contemplating Summers Drives Investors to Seek Beltway Expertise (BBG)
- Austerity Test Looms in Australia as Abbott Pledges Cuts (BBG)
- Gay Spouses in All States Now Married Under U.S. Tax Law (BBG)
- Shadow banks face limits to securities trading (FT)
- EU's Rehn sees European recovery strengthening in 2014 (Reuters) ... or 2015... or 2022... or never?
Unsurprisingly NASDARK, while admitting to "latent software flaws" in the SIP,, choose to place the blame for causing the 'glitch' at the foot of the NYSE Arca...
- *NASDAQ HALT REPORT SAYS DATA FLOOD EXPOSED SOFTWARE FLAW
- *NASDAQ SAYS CONFLUENCE OF EVENTS 'VASTLY EXCEEDED' SIP CAPACITY
- *NASDAQ SAYS SOME ISSUES 'CLEARLY WITHIN' COMPANY'S CONTROL
- *NASDAQ:'UNPRECEDENTED VOLUME' OF MSG TRAFFIC TO SIP CAUSED HALT
- *NASDAQ: SIP RECEIVED OVER 20 SEQUENCES FROM NYSE ARCA
- *NASDAQ: SIP GOT INACCURATE SYMBOL QUOTE STREAM FROM NYSE ARCA
"Other issues contributing to the halt are more endemic to technology issues across today’s complex markets and will require a broader industry-wide effort to resolve... and will present our initial recommendations related to these changes to the SIP governing committee within 30 days." And here is Nanex's perspective.
- UN Insecptors to leave Syria early, by Saturday morning (Reuters)
- Yellen Plays Down Chances of Getting Fed Job (WSJ)
- JPMorgan Bribe Probe Said to Expand in Asia as Spreadsheet Is Found (BBG)
- No Section 8 for you: Wall Street’s Rental Bet Brings Quandary Housing Poor (BBG)
- Euro zone, IMF to press Greece for foreign agency to sell assets (Reuters)
- Brothels in Nevada Suffer as Web Disrupts Oldest Trade (BBG)
- U.S., U.K. Face Delays in Push to Strike Syria (WSJ); U.S., U.K. Pressure for Action on Syria Hits UN Hurdle (BBG)
- Renault Operating Chief Carlos Tavares Steps Down (WSJ)
- Vodafone in talks with Verizon to sell out of U.S. venture (Reuters)
- Dollar Seen Casting Off Euro Shackles as Fed Tapers (BBG)
An ugly day all around...
30Y Treasury yield - biggest 4-day yield compression in 15 months
Dow Transports - biggest single-day loss in ~5 months (2nd worst in 11 months)
Nasdaq - 2nd worst day in 10 months
AAPL - worst day in 3 months (2nd worst day of 2013)
USDJPY - biggest gain in JPY in 10 weeks
WTI - biggest single-day gain in 10 months
Financials - worst day in 10 months
In no particular order: Weak (and strong) US data (good or bad news?), War, Taper (Treasuries 'special'), Debt Ceiling, German elections, New Fed Chairman, imploding developing markets and collapsing global currencies... (S&P 500's first close <100DMA in 2013) it is on... (oh and S&P 500 futures 2nd biggest volume day in 2 months)
With AAPL plunging below the critical $500 level and equity markets slumping this morning, it seems appropriate to reflect once again on the cause of last week's NASDARK debacle. As Nanex so obviously points out in these charts, digging into market data before the Nasdaq blackout at 12:20 EDT on August 22, 2013, we came across several significant periods of extremely high quote volumes. By plotting the number of messages for each of the 6 multicast lines used by the Tape C SIP (Securities Information Processor), we discovered the quote blasts map directly to individual multicast lines. The 'line' carrying AAPL's ticker saw the largest and most egregious quote volumes (spamming perhaps) that eventualy ovehwlemed NASDARK's creeking infrastructure.