NASDAQ

While much has already been written on the topic of peak valuation, social bubbles popping, and the ethical social utility of yesterday's historically overhyped IPO, nobody has done an analysis of the actual stock trading dynamics as in-depth as the following complete forensic post-mortem by Nanex. Because more than anything, those tense 30 minutes between the scheduled open and the actual one (which just happened to coincide with the European close), showed just how reliant any form of public capital raising is on technology and electronic trading. And to think there was a time when an IPO simply allowed a company to raise cash: sadly it has devolved to the point where a public offering is a policy statement in support of a broken capital market, which however is fully in the hands of SkyNet, as yesterday's chain of events, so very humiliating for the Nasdaq, showed. From a delayed opening, to 2 hour trade confirmation delays, virtually everyone was in the dark about what was really happening behind the scenes! As the analysis below shows, what happened was at times sheer chaos, where everything was hanging by a thread, because if FB had gotten the BATS treatment, it was lights out for the stock market. Well, the D-Day was avoided for now, but at what cost? And how much over the greenshoe FaceBook stock overallotment did MS have to buy to prevent it from tumbling below $30 because as Reuters reminds us, "had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion." What about the first defense of $38?  In other words: in order to make some $67 million for its Investment Banking unit, was MS forced to eat a several hundred million loss in its sales and trading division just to avoid looking like the world's worst underwriter ever? We won't know for a while, but in the meantime, here is a visual summary of the key events during yesterday's far less than historic IPO.

Well, better late than never.

If you just submitted an order to buy FB today, and were confident the order was executed even if at market, you may be out of luck:

• NASDAQ HAS PROBLEM DELIVERING FACEBOOK TRADE EXECUTION MESSAGES

What this means is that the exchange at this point is deciding whether or not to send back late executions to all people who bought, or thought they bought. Needless to say this means that the indicated price is likely not the real price if one factors for all the latent orders, on both the bid and offer side, unless of course all those orders get cancelled, further eroding confident in the market, only this time hitting that one segment most disenchanted with the stock market - mom and pop.

• Inside J.P. Morgan's Blunder (WSJ) - Where we learn that Jamie Dimon did not inform his regulator, the Fed, where he is a board member of the massive JPM loss even as he was fully aware of the possible unlimited downside
• Euro Attempted Recovery Countered By Asian Sovereigns (MNI)
• Santander, BBVA Among Spanish Banks Downgraded by Moody’s (Bloomberg)
• Defiant Message From Greece (WSJ)
• G-8 Leaders to Discuss Oil Market as Iran Embargo Nears (Bloomberg)
• Spain hires Goldman Sachs to value Bankia (Reuters)
• China to exclude foreign firms in shale gas tender (Reuters)
• Fed Board Nominees Powell, Stein Win Senate Confirmation (Bloomberg)
• Defiant Message From Greece (WSJ)
• Fitch Cuts Greece as Leaders Spar Over Euro Membership (Bloomberg)
• Madrid Hails Moves by Regions to Cut Spending (WSJ)

Currently, there is massive negativity surrounding gold and silver and in particular, gold and silver mining stocks. At times like this, when gold and silver have taken a fairly brutal hit in a condensed period of time thanks to low daily trading volumes both in PM futures and PM stock markets that make it very easy for the banking cartel to manipulate them, it can be difficult not to sell out of everything and run for the hills if one allows emotions to dictate one’s decisions (always a bad move).

Last week the hedgies were dumping, as the "momo whale" dumb money was chasing things higher on low volume intraday levitation. Today, idiot money (which is known thus for a reason) joins the dump fest. And according to Goldman, "the selling pressure is still muted." And unless the Politburo of the Developed World comes up with a Deus ex Printerium fast, muted may soon go to Max Volume.

Curious how the world's most important trading desk saw the action today? Here it is.

David Einhorn who crushed it this week with huge profits on his short positions in both Herbalife and Green Mountain, finally takes on the ultimate competitor: the Federal Reserve, likening its "strategy" to a Jelly Donut policy, and explains what everyone who has been reading Zero Hedge for the past 3 years knows too well: "I will keep a substantial long exposure to gold -- which serves as a Jelly Donut antidote for my portfolio. While I'd love for our leaders to adopt sensible policies that would reduce the tail risks so that I could sell our gold, one nice thing about gold is that it doesn't even have quarterly conference calls." Or, as Kyle Bass said last year, "Buying Gold Is Just Buying A Put Against The Idiocy Of The Political Cycle. It's That Simple!" Not surprisingly, it is only the idiots out there who still don't get what these two investing luminaries are warning about.

Goldman's sales desk brings us the FTW "analysis" of why today's rally fizzled: "What happened to the equity rally? SPX slips 65bps from the day’s high, NDX an even more substantial 1.15%. Post-ISM glow just fading? Prudent profit-taking as folks remember Europe isn’t closed tomorrow?"

So many shorts, so little time

As if anyone needed another example of who is really running the show, the S&P 500 cash index (an index that tracks the weighted performance of 500 underlying and supposedly fundamentally idiosyncratic companies) closed at 1399.99 after breaching the almighty 1400 earlier in the afternoon. The Dow Industrials failed to close in the green for the month and Dow Transports notably diverged bearishly today as the afternoon's ramp-fest in equities - and notably nothing else - gave hope to hope-less. Between a weak/strong (you decide) jobless claims data, a dismal Kansas Fed (and Chicago NAI negative print) juxtaposed with what was 'supposedly' strong pending home sales (contracts not signings note), it seemed some early QE-hope spillover from Bernanke yesterday got us going (with gold outperforming) early on but as the US day-session began, stocks took off from their lows, stabilized into the European close, then re-accelerated - running stops to the early April non-farm-payroll print levels. Stocks reconnected with Gold's early run but this did not have the feel of a QE trade at all - the USD was flat all afternoon, volume was dismal, gold actually fell as stocks took off this afternoon, and Treasury yields rose and fell in a narrow range. In other words, there was not a concerted cross-asset class QE hope here -  this was all stocks on their own - as they disconnected from our cross-capital structure and broad risk asset models as the afternoon wore on. Notably SPY implied vol is very close to crossing below its 20-day realized vol for the first time in almost five-months as VIX tested under 16% but couldn't maintain it into the close. The USD was lower close-to-close with AUD strength and JPY weakness most obvious as the US day session began with EUR relatively stable. Treasuries broadly remain lower in yield on the week with 7Y outperforming and 30Y basically unch. Copper was the best performing commodity today followed by Silver (though Ag remains down on the week) but Gold and Oil also benefited from USD's leaking. Discretionary, Energy, and Financials sectors outperformed on the day in stocks (with Materials weak - another non-QE sign) but it was the equity market's standalone bullishness that suggests this was more technical than a hope- or fundamental-based regime shift.

Once again pundits are claiming that housing is "finally recovering." But they're overlooking three peaks: Peak Housing, Peak Financial Fraud, and Peak Suburbia, all of which suggest years of stagnation and decline, not "recovery." Once the belief that housing is the bedrock of middle class wealth fades, so too will the motivation to risk homeownership in an economy that puts a premium on mobility and frequent changes of careers and jobs. Only one aspect of housing hasn't yet peaked: property taxes. If the risks of homeownership weren't apparent before, they certainly are now as local governments jack up property taxes to indenture homeowners into tax donkeys.

A 2.7% gain in the NASDAQ, obviously dramatically aided and abetted by the squeeze-fest in AAPL +9% from last night's close, was the best gain in over four months for the tech-heavy index but still leaves it lagging the Dow (by over 2%) and S&P 500 (by over 1.5%) from the 4/9 highs in Apple. At the other end of the spectrum in the real economy, CAT's less than rosy outlook, saw it suffer its largest drop in 7 months dragging an impressive 37pts out of the Dow's lagging but positive performance on the day (now positive from the 4/9 Apple Top day). Of course the Apple-exuberance which seemed enough for the entire world's risk-asset markets to decide that everything is fixed started the day off gap higher in the US and late-to-the-game retail pushed equities higher out of the date this morning as the rest of risk-assets were generally steady. Europe's close seemed to have only minimal impact as everyone was focused on the FOMC statement and Bernanke's presser. Between the FOMC and the Bernanke conference, Gold, stocks, and the USD knee-jerked and retraced but Treasuries remained worse (higher in yield by 3bps or so). Once Bernanke began his quaking tenor, Gold pushed higher, Treasuries lower, stocks higher and the USD lower as hints of QE back on the table were dribbled in between defensive tacks on biflationary concerns. This QE-specific action was accompanied by low volumes though (as usual) but volatility did compress (a la typical QE trades) with VIX closing below 17% - its lowest in over a month and near its largest divergence from European volatility (V2X). Commodities in general lagged early then recovered as USD sold off on QE chatter from Ben - Silver underperformed on the day but outperformed notably off its lows after testing below $30 for the first time in 3 months. Treasuries pulled back positively off their high yields of the day in the late afternoon ending the week with the short-end (out to 5Y) flat and 10s/30s 2.5bps higher in yield. HYG was a dramatic high-beta outperformer today - now green for the month - even as HY and IG credit lagged the ebullience in stocks (though did improve to two-week highs). ES (the S&P 500 e-mini future) closed above its 50DMA on average volume today with some heavy and larger average trade size into the close ending just above Friday's highs - even after the dismal US data (Durable Goods) and Europe's issues this morning.

All eyes will turn to the Fed and the Fed statement. I think we get a slightly more dovish statement. More language that the economy shows signs of weakening and that the Fed is vigilantly watching the data to determine if additional actions are necessary. No change in low rates for extended period, though maybe their they soften the language further hinting that it could go on longer than 2014 if moderate economic growth continues. I don’t think they will say anything new on inflation, though they might try to hint that it is moderating in their eyes, again, paving way for more QE. So I suspect a dovish statement, but no QE. I think the market will initially like that, but we will see the enthusiasm wane as that seem very well priced in, and without QE, and once AAPL stabilizes, we can get back to focusing that on the whole the data here has been weak, and that the situation in Europe is deteriorating rapidly.

Practice saying "Quadrillion" a few times every day.