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#HashCrash 2.0 - QE-OFF Rumor Sends Market Turmoiling By Whopping 0.37%

Tyler Durden's picture




 

After another five-day run of higher prices and lower volumes (and following yesterday's 2013 high average trade size), all it took was a twitter-based rumor of the possibility of a pause in the Fed's punchbowl for the S&P 500 futures to see their biggest intraday drop in May. It seems, for once, that 330 Ramp Capital was trumped by the HashCrash as stocks closed an odd shade of green - called red. Today was extremely volatile where-ever you looked - FX, rates, credit, vol, and commodities; but perhaps the JPY move triggered some unintended consequences in rates/swaps.

 

The market moved on the rumor (even as everyone believed it was a rumor)... the algos tried to wrestle control (and we reverted back up to VWAP) but then faded into the close...

 

JPY smashed through 100 (and 100.50) - and FX markets cluttered into all sorts of USD strength-based stops...

 

Treasuries had a very odd day... typical equity up and bonds up early on behavior; but it seems like markets were on a roll from the JPY move - which seemed to get started when the auction went off better than expected...

 

Commodities were relatively well-behaved except for precious metals on the QE taper rumors.

 

Credit continues to decline its invitation to the dance this week from stocks...

 

 

and VIX remains well bid as managers protect rather than add...

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: Did the shorts finally capitulate today? For a red day in broad indices, something very odd happened - 'most shorted' names were squeezed massively! first out of the gate and then again after the European close - so much so that at 1430ET, the 'most shorted' index had managed triple the performance of the market thanks to a huge covering drive... that marked the top...


 

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Thu, 05/09/2013 - 16:23 | 3545984 Flaming Ferrari
Flaming Ferrari's picture

A dip! At last! Back up the truck boys. Dow 116,200 here we come!

Thu, 05/09/2013 - 17:25 | 3546137 flacon
flacon's picture

I went to the coin shop today and bought a boat load of Zimbabwe ONE HUNDRED TRILLION DOLLAR notes. I should be good to go until 2073 when I turn 100 years old. Fuck stocks man. Buy Zim notes!

 

I sold silver to buy Zimbabwe notes:

http://www.youtube.com/watch?v=AoF747e5R6I

 

Thu, 05/09/2013 - 16:23 | 3545987 HedgeAccordingly
HedgeAccordingly's picture

i blame bullshit squack services http://TFPinsider.com 

Thu, 05/09/2013 - 16:25 | 3545989 zorba THE GREEK
zorba THE GREEK's picture

Rumor is a major tool used by the world financial engineers (central banks)

Thu, 05/09/2013 - 17:07 | 3546112 W T F II
W T F II's picture

True....But this was a rumor OF a rumor...

Thu, 05/09/2013 - 17:25 | 3546160 jmcadg
jmcadg's picture

Rumor (read) Hilsenrath is a major tool used by the world financial engineers (central banks) ;)

Thu, 05/09/2013 - 21:48 | 3546839 espirit
espirit's picture

MOAR RUMORS!

Thu, 05/09/2013 - 16:26 | 3545991 The Thunder Child
The Thunder Child's picture

OT

Paul Atreides here, it's been a long time since I posted and I buried that account when I deleted Gmail but I have been reading your comments for my daily dose of humor as well as the articles from Tylers for the latest in financial thievery. I never left fight club, I have been watching the fights from the shadows.

There's a member of our community that needs a bit of help to get his project completed and I am trying to help him get to the finish line. I think you all know Bill Still from The Money Masters and The secret of Oz. His latest project 'Jekyll Island - the documentary' is nearly finished and he needs only 5k to wrap it up. I would ask that anyone that wants to see this work completed and spread to the largest possible audience to make a small contribution to the kickstarter campaign that he has posted. His deadline is this Sunday night and it would be great to have some contributions flow in from fight club, even greater if we could help him achieve his goal.

http://www.kickstarter.com/projects/191063619/jekyll-island-the-documentary

Even if you can spare $5 - $20 that is a huge donation and would help Mr. Still get to complete his masterpiece. If you can spare more then $24 FANTASTIC he will give you some decent swag for your contribution. T-shirts, signed DVDs, posters etc.. I am going to post this a few more times in the coming days so please don't consider it spam or solicitation it is for a fantastic cause and this documentary is going to be absolutely stellar!

 

Thu, 05/09/2013 - 16:31 | 3546005 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Paul Atreides from Dune?  There's no spice on that Island.  Just Spanish Moss and the skeletons of the Federal Reserve.

Thu, 05/09/2013 - 16:33 | 3546013 The Thunder Child
The Thunder Child's picture

It is perhaps better that Bernanke dies in the innards of a worm.

Thu, 05/09/2013 - 17:03 | 3546097 booboo
booboo's picture

Call denninger, he has made billions on shorting the market he may be able to spare some names of potential donors since he rarely volunteers his own time or money, usually just brow beats his followers about not shutting down major highways by standing in traffic.

Thu, 05/09/2013 - 16:28 | 3545998 ghostfaceinvestah
ghostfaceinvestah's picture

Today told you all you need to know about what is driving this stock market bubble.  How can the Fed look at this action and not realize they are setting up asset prices for an enormous fall if they ever stop printing?

Thu, 05/09/2013 - 16:33 | 3546014 Lonewar
Lonewar's picture

Ghost,

This was the test, to SHOW them that they can never stop printing. And to scare the fuck out of politicians, after all, the house passed a bill that would lower the stupidity of arguing over the debt ceiling today, so the banksters had to show who was in charge...

Thu, 05/09/2013 - 17:12 | 3546126 NotApplicable
NotApplicable's picture

My initial thoughts as well.

Thu, 05/09/2013 - 16:34 | 3546018 Dr. Engali
Dr. Engali's picture

You're assuming that's not their plan all along.

Thu, 05/09/2013 - 18:40 | 3546414 12ToothAssassin
12ToothAssassin's picture

Precisely my first thought

Thu, 05/09/2013 - 16:33 | 3546002 freewolf7
freewolf7's picture

This is like a movie trailer.

Thu, 05/09/2013 - 16:32 | 3546011 Dr. Engali
Dr. Engali's picture

A bunch of weak handed shorts will jump on the fake news pull back only to get squeezed out next week.

Thu, 05/09/2013 - 16:38 | 3546025 malikai
malikai's picture

Tell the wife to pick up some dramamine on the way home tonight.

http://blog.quantsig.net/2013/05/09/sp-vs/

Thu, 05/09/2013 - 16:39 | 3546029 spaceduck
spaceduck's picture

oh what, scary QE can end? yeah you better scary because this shit will end sooner or later, and down we go moterfucker!!!

No money no honey, this is the law

Thu, 05/09/2013 - 16:43 | 3546034 AcidRastaHead
AcidRastaHead's picture

This certainly makes all the boobs on CNBC that pseudo-debate the Fed's influence on the equity market look like ... well, boobs.

Thu, 05/09/2013 - 16:45 | 3546040 scatterbrains
scatterbrains's picture

Lunar ring of fire over Asia tonight with a new moon to mark the highs in stocks.  Weird how shit happens aligned with natural events...  We shall see bitchez 

Thu, 05/09/2013 - 16:48 | 3546048 Waterfallsparkles
Waterfallsparkles's picture

Just amazing how everyone went into a panic with the Dow dropping 22 points.  Especially, since it has been up over 5 days with 50 or so points to the upside every day.

Thu, 05/09/2013 - 16:51 | 3546059 gjp
gjp's picture

No kidding.  And it's basically reversed those losses after hours.  More fucked up each and every day.

Thu, 05/09/2013 - 17:10 | 3546120 Keynesian Mess
Keynesian Mess's picture

They aren't used to that reddish tinge of green.

Thu, 05/09/2013 - 16:53 | 3546055 Waterfallsparkles
Waterfallsparkles's picture

The FED said that they would increase or DECREASE purchases.  Yet after about 300 dow points to the upside some one suggested that they might tighten.

After the FED statements the only thing Wall Street heard was the word increase and they ramped the Market to no end.  No one heard or even considered they would DECREASE purchases. Yet, some one suggesting that the FED may actually DECREASE pruchases put them in a tissy.

Thu, 05/09/2013 - 16:54 | 3546066 SheepDog-One
SheepDog-One's picture

OH MY FUCK! DOW closed down -22? So it's 'armageddon on' then? Has to be!

Thu, 05/09/2013 - 17:21 | 3546151 rubearish10
rubearish10's picture

Perhaps -2200 will wake a few sleepy bunnies!

Thu, 05/09/2013 - 16:55 | 3546072 SheepDog-One
SheepDog-One's picture

What it really looks like to me is they just scalped a bunch of bond dorks. 

Thu, 05/09/2013 - 17:18 | 3546142 EclecticParrot
EclecticParrot's picture

"bond dorks":  A bit of a redundancy, no?  

I doubt that James Dean or Jean-Paul Belmondo knew anything about convexity.   Sean Connery, on the other hand, is an avowed expert on duration, but kept this knowledge close to the vest, in order to maintain his level of 'street cred', and ensure getting laid wasn't a semi-annual event.

Thu, 05/09/2013 - 16:59 | 3546085 yogibear
yogibear's picture

Just like there was an explosion at the Whitehouse.

Warren Buffet rumors don't work anymore.

It's about movement. The bot trading is getting boring.

Thu, 05/09/2013 - 17:01 | 3546093 fuu
fuu's picture

Where would the DOW, S&P, and Nasdaq be if all their components were at new all time highs? Trying to get a feel for what the markets will look like after all the shorts capitulate.

Thu, 05/09/2013 - 17:35 | 3546196 freewolf7
freewolf7's picture

Oh, I'm in!

South Park grows up.

And It's Gone!
The Sequel

Thu, 05/09/2013 - 17:22 | 3546153 The worst trader
The worst trader's picture

btfd for five more years at least!

Thu, 05/09/2013 - 17:24 | 3546157 Panafrican Funk...
Panafrican Funktron Robot's picture

POMO flow outlook:

This week:

Today:  light

Tomorrow:  light

Next week:

Monday:  none!

Tuesday:  heavy

Wednesday:  light

Thursday:  light

Friday: very heavy  

Thu, 05/09/2013 - 17:27 | 3546167 jmcadg
jmcadg's picture

Sounds like my wife's periods, especially friday! It always seems to be friday in my house!!!

Thu, 05/09/2013 - 17:32 | 3546187 ceilidh_trail
ceilidh_trail's picture

Ok, so everybody in the pool Monday! BTFD 4eva...

Thu, 05/09/2013 - 17:25 | 3546161 Jake88
Jake88's picture

Could it be an early warning? I mean how long can this go on as FUBAR as it is.

Thu, 05/09/2013 - 17:26 | 3546166 Al Huxley
Al Huxley's picture

Tyler, do an experiment tomorrow - tweet 'Chinese to sell 1000 tons of gold, reinvest heavily in  US MBS market', then 1/2 hour later, tweet 'Comex to acknowledge inevitable default on gold contracts - will settle all in cash'.  But maybe extend it even further, and put a post on ZH 1 hour before the first tweet, telling everybody reading here that your going to be tweeting the above, and at exactly what time the tweets will be.  Lets see exactly how fucking gullible these markets really are.

Thu, 05/09/2013 - 21:54 | 3546850 espirit
espirit's picture

...don't tell nobody.  Just do it.

Double Dog Dare Ya.

Thu, 05/09/2013 - 17:38 | 3546203 Fuku Ben
Fuku Ben's picture

Plan A: Dumping paper and failing to deliver physical to some of the 99% was becoming too apparent and stopped working

Plan B: Spread Rumors

Gotta find new ways to suppress the price of physical while the remaining physical is looted by the 1%

 

Is CME the paradigm? Terry 1%? Leo 99%?

CME - People want physical

http://www.zerohedge.com/news/2013-04-30/cme-chairman-gold-%E2%80%9Cpeople-don%E2%80%99t-want-gold-certificates-they-want-real-product%E2%80%9D?page=1

CME - Refused Delivery of Physical

http://silverdoctors.com/former-cme-ceo-refused-physical-delivery-for-2-gold-contracts/

Thu, 05/09/2013 - 17:38 | 3546206 Silverhog
Silverhog's picture

I dare you Ben. Were at 42,000 feet with a full load of passengers. Shut down 3 engines and lets see how far we glide.

Thu, 05/09/2013 - 17:58 | 3546269 Aurora Ex Machina
Aurora Ex Machina's picture

@silverdog; missed the reply button

You can land it, but the plane is still broken.

Thu, 05/09/2013 - 18:03 | 3546283 forwardho
forwardho's picture

In a world where reality is disconnected from fundimentals, where actual production of value (or lack there of) matters not, Where there is no  driving force but QE, we get RUMORS.

If there were any doubts that this charade we call a "market" is teetering on the edge of the abyss, they have been dispelled.

It has been a sick joke for some time now.

Trapped in a fantasy become nightmare with a sociopathic helmsman.

 

Thu, 05/09/2013 - 18:20 | 3546345 maelstrom
maelstrom's picture

I run a long and short fund. Many of my shorts went vertical today (+5% to +7%). I sat tight and ended up only -0.3% on the day.

I have a simple explanation for today's squeeze. TSLA. Fortunately I was not short. Everyone who wanted to be short found this one to be irresistible. TSLA was up +33% intraday and panicked some overlevered idiots into buying back this and other short positions.

Bought some SPY puts yesterday. If you've got a big portfolio you don't want to dump, insurance is still pretty cheap.

Of course, PMs, firearms, and ammo make the best insurance. Keep filling that safe. :)

 

Thu, 05/09/2013 - 18:24 | 3546358 maelstrom
maelstrom's picture

I forgot to add why I did not short TSLA. My neighbor bought a Model S and let me test drive it. I quickly realized I was staring at the future. Believe the hype- it is an amazing ride.   

Thu, 05/09/2013 - 21:58 | 3546863 espirit
espirit's picture

Need more on the road to create demand for replacement parts.

Otherwise, it's just not worth it to chop one up.

Thu, 05/09/2013 - 18:34 | 3546392 thismarketisrigged
thismarketisrigged's picture

of course the market basically gained 30 pts in the final minute to make the losses basically flat.

 

dont worry, these criminals will make sure the market goes up 1000 pts tomorrow because of this ''sell off', i kid u not, they fucking used the word ''sell off'' to describes todays action. u know 22 dow pts, 6 s&p pts, in this market, that is like = to the 1987 crash.

 

we need rumors everyday, that is the only way we see any red.

Thu, 05/09/2013 - 18:54 | 3546460 lolmao500
lolmao500's picture

Rumor by a nobody moves the market... LULZ.

Thu, 05/09/2013 - 20:06 | 3546606 razorthin
razorthin's picture

This fucker will break soon in spite of QE.  Will become quantitative erasure.

Thu, 05/09/2013 - 21:31 | 3546800 W T F II
W T F II's picture

I am with you there, bro...I really do not believe that people undestand the limitations of QE....It can actually CAUSE a crash...!

Thu, 05/09/2013 - 22:02 | 3546870 espirit
espirit's picture

But on Bizarro World in a parallel universe far, far away...

A crash is a ramp.

Just sayin'.

Thu, 05/09/2013 - 22:19 | 3546917 W T F II
W T F II's picture

"Opposite World", where a crash is a ramp and QE works to stimulate the real economy...In A Galaxy Far, Far Away....

Fri, 05/10/2013 - 10:16 | 3547127 sitenine
sitenine's picture

What the fuck are you talking about? QE is easy money, you fucking idiot. There can be no crash until the QE is turned off. Yes, QE makes the eventual crash worse, but it doesn't cause it - where the fuck have you been for the past 5 years? Fuck! That's what this article is trying to tell you! You are confusing hyperinflation with crash, or maybe you just see the two as synonymous (I guess I can at least forgive you for that mistake since one leads to the other).

Fri, 05/10/2013 - 02:34 | 3547382 polo007
polo007's picture

http://www.safehaven.com/article/29772/the-us-indices-the-reality

Since the financial crash of 2008 the western economies (US, Euro zone and Japan) have been using quantitative easing (QE). QE is not new. It was also used extensively in the 1930's. Japan has been using forms of QE for over a decade. But when one looks at the velocity of money and the money multiplier the money is not getting into the broader economy. But it is getting into the stock markets largely through the large money center banks that are the major beneficiaries of QE. Rising stock market valuations help the money center banks balance sheets. It is believed for the US at least that QE is primarily to help prop up the banking systems in the US, the Euro zone and Japan. The banking system remains saddled with huge amounts of debt that is either toxic or uncollectable.

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