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.
- Opposition figure: major decisions on Syria expected within hours (Al Arabiya)
- Syria challenges U.S. to "produce the evidence" that Assad regime launched chemical attack (CBS)
- British PM says world must act on Syria, weighs response (Reuters)
- U.S. Treasury to Hit Debt Limit in Mid-October (WSJ)
- U.S. could look beyond U.N. Security Council in any Syria strike (Reuters)
- Nasdaq, NYSE at odds on outage cause as SEC seeks facts (Reuters)
- Ackman’s J.C. Penney Sale Ends Failed Saga to Agitate for Change (BBG)
- Zandi, LaVorgna, Blinder, Rattner all is one con puff piece (BBG)
- Best Buy Founder Schulze Plans Stock Sale to Diversify Assets (BBG) - "diversify assets" = dump overpriced junk
- Zero Worship: Credit-Card Firms Compete With No-Interest Transfers (WSJ)
- Len Blavatnik wins $50m in JPMorgan lawsuit (FT)
- Danone Finds Yogurt’s All Greek as Oikos Chases Chobani (BBG)
It seems "glitch" is rapidly becoming the new normal for our cloud-based world as last week's epic fail on the NASDARK (and Amazon's 30-minute 'dark' period) has now been followed up by a "glitch" at one of Amazon's data centers last night knocking out users of Vine, Instagram, and Netflix. While NASDAQ remains tight-lipped over the source of its glitch, Amazon has narrowed the search for the vindictive bug to a 'partial failure of a network device' in a northern Virgina data center. As The BBC reports, the problems began around 1600ET and continued for several hours. We await news from EUREX on what 'glitch' caused their systems to fail epically this morning also.
What the Falafel? There are times when you wish you could just dig a big hole and throw yourself into it and let someone else fill it in with shovel-loads of muck.
These issues did not simply go away based on the fact that people were on vacation. So expect volatility to increase going forward.