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Stocks Slump Most In 6 Weeks As VIX Spikes Most In Over 3 Months
Weakness at the open last night extended lower during Europe's early session - testing the 11-month trendline levels for the S&P 500. As the US day session opened we bounced gloriously on the shoulders of JPY-driven mania (and absolutely and utterly no news) but as usual that lasted only as long as POMO and the markets stumbled along for the rest of the day - until IB raised margins and then the high volume dump started. All equity indices dived and VIX surged by its most in over 3 months above 19%. Away from the schizophrenia in stocks, FX markets were quiet after an early eruption in vol (USD -0.25% on the day); Treasury yields were 1-3bps lower (but off their best levels); Silver spiked near the open (as did Gold) and held gains. Stocks close at their lows with an ugly dump.
Did IB just burst the bubble?
The S&P 500 closed below its 50DMA (down 10 of last 13 days) and is 3.5% off its all-time highs with the biggest 1-day drop in 6 weeks...
Bonds and Precious Metals outperforming post Shutdown (red line)...
VIX jumped its most in almost 4 months but was leading stocks lower earlier in the day. S&P futures are extending losses from the cash close.
Remember we are very close to that 11-month trendline break here...
The IB margin hike appeared to drive FX carry traders crazy and USDJPY collapsed (with JPY surging back below 97 to 7 week highs against the USD) - Abe will not be happy...
Charts: Bloomberg
Bonus Chart - Still think fundamentals (and not marginal leverage) drives stocks? Think again...
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Wall Street will not be denied more debt on the taxpayers backs!
"Debt limit? Continuing Resolution? Oh yeah? We're going to lower the hammer on quarter end IRA/401K statements!
Just wait until your constituents see what you have done to their imaginary wealth captured in our casino!"
Do you think there are actually enough people left with 401k's to matter?
Everyone I know that had a retirement plan cashed it in after the last crash, so they could have money to live on after their forced early retirement.
Me too, but the .gov apparatchiks and College/University intelligentsia still got 'em; along with the corporate wonks.
And they all still believe it's "their" money, and that they have a "right" to it; as if Jon Corzine never existed and there isn't $17 Trillion in unpayable debt.
Hopefully they bought a good chunk of phyzz with that fiat currency. Anybody holding paper when the Great Reset begins is going to be hurtin' for certain.
Thank goodness that my TVIX is only down 95% now
I got some money trapped in an IRA.
I just used some of it to buy GRZZX
I just wonder if Ben can transfer enough digits to JPM, HSBC, GS et. al. to keep PM investor sentiment squashed.
there is that 1310 ~ 1330 USD trading range again :)
after they raised the debt ceiling (thanks oboma) the rally will go on.
lol ,i guess hedge funds love the volatility right now :>
It got chilly today so Natural Gas spiked 4% regardless of supply.
Aren't the markets almost back to the levels where the Asia-session left them?
I think they are actually going to do it this time. I think they are going to force a technical default.
It might only last 6 hours or something like that, but it will shock the markets.
Looks like it might be a rough day in Asia. usd/jpy just took out the 200day avg. @ 96.71
This whole money printing exercise in Japan is not going so well. Maybe they need to do moar.
Totally different story in the US. Going great here. Couldn't be better.
What's a fun-duh-mental?
I'm not convinced that this entire episode is much more than a managed arena game for those with the information to rake in winnings on the swings.
Question for the braintrust: Assuming that it is possible to prioritize interest payments and delay or truly shut down various snippets and snappets of the government, how can we forecast out how long interest payments on outstanding debt can go without the Treasury running so low on cash that things like military/agri subsidies fail to go out?
Perhaps the question is academic because everything is purely perception driven, so at this point were the clownish make-believe government to fail to raise the debt ceiling, it would be interpretted as a default anyway.
I don't know the date, but let me put this in perspective for a moment:
40 cents of every dollar the federal gvoernment spends is borrowed. They collect $2T a year in taxes and spend $3T a year.
The cumulative debt of the federal government is over 100% of GDP and climbing fast.
If we paid for NOTHING but current entitlement payments (which are not part of the discretionary budget and are on auto-pilot-payout even during a government shut-down), we would still be a little short trying to cover it with incoming tax revenues.
All "surpluses" and "lock boxes" in various government programs contain ZERO actual funds and are merely stuffed with IOUs from Congress. So, basically, the instant they go revenue-negative, they become and IMMEDIATE drain on CURRENT YEAR funding.
They'll never default, though. Either Obama will blow away the entire concept of a "debt ceiling" by EO/Emergency Powers (my prediction) or they will start handing out vouchers/scrip/IOUs that will be considered "payment in full (temporarily)" much like California does as it nears the end of most budget years.
There isn't a ratings agency on the planet that would have the balls to call this a "default," however. We will be triple-AAA right into the dirt.
Banks, Terrorism and other Existential Threats: The Real Invisible Hand
A request for assistance from ZH readers (known for being enthusiastic commenters) :
We have prepared a series of three papers and a podcast on the dangers of the use of fiat/digital currency combined with the near total dependency of most of our economies on the international payments and settlements system. This leaves us vulnerable to a systemic collapse, an insider threat and/or a foreign attack (read China, Iran, Hezbollah). In short, banks and anyone who deals with a bank is on the frontline of a new form of warfare.
These research papers and the podcast mark the first time that anyone has been drawn attention to the line between fiat vulnerability and the payments and settlement system. We will be writing a fourth paper on potential solutions and options for moving ahead. Any comments or ideas are welcome here or at cohost@brokenmirrors.ca
CONFLICT OF INTEREST STATEMENT
** *The Broken Mirrors website is not set up to be a for-profit website or business (yet). However, we do intend to make the transition to making money sometime in early 2014 as we develop the work on the site and an associated online training program. In other words, no direct financial gain from this posting.
Banks, Terrorism and other Existential Threats: The Real Invisible Hand
We can begin the discussion with a simple proposition: what bankers are allowing to happen (consciously or not) at Central Banks and Financial Institutions is far more fearsome than what terrorists have planned in the past. A failure of their jointly operated payments and settlements system would do more systemic damage to the advanced economies than any terrorist attack has done to date. The payments and settlements system is virtually invisible to the public, intelligence and security agencies and most politicians. Yet this ‘invisible’ system has implicated itself into the everyday lives of the populations of almost all of the developed economies.
The other invisible factor lurking in the background is the fiat currency system used by almost all developed nations. Those bank notes in your pocket or wallet are called ‘fiat currency’ as there is little to nothing that supports them other than pure faith – which is by definition invisible. When individuals lose faith in their government or their financial system, the currency can become nearly worthless in a rapid manner: history is littered with failed fiat currencies.
The intelligence community as a whole has not seriously examined the potential for the application of the use of force (cyber or otherwise) within this economic domain. Nor is it clear that most Western governments have any ability to respond to such an attack (or internal failure) should such an event occur. As Jason Healey, the former White House Director of Cyber Infrastructure Protection noted in a recent address, if the United States is engaged in a cyberwar, Americans would be far better served by contacting Microsoft or AT&T rather than the Department of Homeland Security.
For more on this see:
Banks, Terrorism and other Existential Threats: The Real Invisible Hand http://www.brokenmirrors.ca/?p=230 (intro, list of papers and links)
The Invisible War in Your Wallet – The Sixth Domain of Warfare is You http://www.brokenmirrors.ca/?p=203 (the invisible links between banks, terrorism and existential threats, the international payments and settlements system, the existential threat resident in the current limitations of the (il)legitimacy of the fiat currency system, impact of a failure on the economy and you)
Welcome To The Front – Social and Economic Warfare is all about You http://www.brokenmirrors.ca/?p=252 (future scenario involving the People’s Republic of China, China’s capabilities and intentions, how a potential conflict scenario could develop, previous payments and settlements attacks and failures, conclusions about the state of system security)
The Transformation of the Sixth Domain: Economic Warfare and You in the Information Age. http://warontherocks.com/2013/10/podcast-the-war-in-your-wallet-the-real-invisible-hand/ or at http://www.brokenmirrors.ca/?p=261 Podcast (economic warfare, scenarios, fiat currency history, fiat currency current situation, pushing back against the system, community resilience)
FUTURE PAPER: We intend to write one more paper on the payments and settlements system which would identify the path ahead. Reader comments and ideas will be included and we want your views! This paper will address issues around the functioning of ATMs in the event of a payments and settlements crisis and whether or not individual FIs would be able/willing to provide cash to only their own customers. Would this cause a run on the banks? If there is a breakdown in the payments and settlements system, what would happen to note exchange and provision systems and how would cash get to the FIs? What would be the effect on securities exchanges, cheques clearing, retail debits, direct deposits, derivatives and foreign currency exchanges? How would they be settled without the payments and settlement system?
Please leave comments here or send directly, in confidence, to cohost@brokenmirrors.ca
A whole lot of words to simply advise people to:
- go cash
- have precious metals
- either farm yourself or know someone who does really well
The sheep are dumb. They don't understand what you are explaining. They don't understand how the scam of modern finance works. Use simpler terms. Tell them that their bank deposits are not safe, no matter what government says. The whole banking and finance industry has been perverted in such a way that thousands globally can live off the scam and never have to lift a finger in their lives. The scam is to create a paper that everyone out there has to accept as currency, the payment between two parties and that this paper is virtually printed or digitially entered without any backing. Explain to the sheep that rules of accounting are virtually non-existent when this parasitic paper pushing group simply adjusts their electronic balance sheets. They increase their assets with re-valuation gimmicks in order to be able to increase the liabilities and lend more. Sweet gig for the parasites.
Don't write detailed papers. Keep it simple. Where does money come from? Who has the authority to create money and who controls the volume and speed of circulation etc. Describe in simple terms what tools the scammers are using to pull this off and point out that the scammers are using their own made up language and words to justify their actions and bamboozle the masses.
That in a nutshell. Good luck with your quest. Remember, the trick is as old as the idea from men on how to cheat other men out of the profits of their (honest) labor. It's stealing in such a way that the victim does not even feel he's been had until it is way too late to go after the thieves. Nothing we are witnessing today has not been done in similar fashion before this time.