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Goldman Summarizes Today's "Serious Pain In Risk Assets"

Tyler Durden's picture




 

From Goldman's sales and trading team. Remember: Long S&P 500 (in AUD terms) is one of the FDIC-backed hedge fund's top client recommendations of 2014. As if, of course, shorting gold.

Equities have the worst day of the year and really no exchange around the globe was left out. Now every one on our screen is down YTD. For US markets, today was the worst day since last June. Overall, while today was active, it was still an orderly session. We did have some interest to buy topside options. All sectors in the red with Telecom hardest hit -3.7%. Closes: SPX -2.3% to 1741.25; DJIA -2.1% to 15372.8, NASDAQ -2.6% to 3996.96.

 

The VIX is up 2.68 to 21.14.

 

FX symptomatic of the larger risk off move with EM weaker across the board: MXN -1.35%, BRL -1.1%, ZAR -1.3%, and TRY -1.2%. In G10, the price action was more concentrated with JPY +1.0% which intraday broke below 101 to a 3-month low of 100.77 before recovering slightly. USDJPY is looking increasingly shaky as the Nikkei continues to get hit, now down over 10% YTD. AUD and CAD hold in well, CAD actually +0.3% today and we didn’t see position unwinds there.

 

Serious pain in risk assets lent a bid to US treasuries as yields continue to retreat from their New Years’ day highs. Weak ISM Manufacturing exacerbated the downward pressure on yields in a market already feeling a flight to quality bid on the back of weakness in NKY and Eurostoxx. Flows in the morning were relatively muted despite huge volumes in futures. Notable flows in the afternoon were many non-traditional users of USTs buying the belly in small clips that ultimately amounted to considerable net buying. Also notable, considerable activity in TYH 125 puts today as over 100k contracts were traded by lunchtime. 10s and bonds lead the rally, both finishing 7bps stronger at 2.577% and 3.531% respectively.

 

Gold traded within a $5 range during Asia and London hours but spiked abruptly after ISM data came in well below expectations, touching an intraday high of 1266.40 before calming down to about 1261 +1.33%.  Base metals was once again weaker today as aluminum fell 1.70% marking an 8% decline since 17Jan14. The crude complex was broadly weaker in line with the move in equities but Brent found in particular found a bid around noon, trading up to 106.15 from an intraday low of 105.50.

 

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Mon, 02/03/2014 - 19:14 | 4397762 X.inf.capt
X.inf.capt's picture

vix is getting high, but the baltic dry index is sinking like a rock...look out below... bitchez!

 

Mon, 02/03/2014 - 19:16 | 4397786 knukles
knukles's picture

"Goldman is a serious pain in the assets?"

Say what again?

 

Don't forget that it seems to be book these days that Goldilocks and the Morgue are net long the shiny stuff.

Mon, 02/03/2014 - 19:20 | 4397806 Ray1968
Ray1968's picture

I won't be happy until I see bankers jumping off buildings!

Mon, 02/03/2014 - 19:55 | 4397935 Pool Shark
Pool Shark's picture

 

 

The only summary you need:

http://www.youtube.com/watch?v=04xOsNW7zTA

 

Mon, 02/03/2014 - 20:09 | 4398007 Say What Again
Say What Again's picture

@Knukles,

Did you call for me?

Mon, 02/03/2014 - 19:38 | 4397845 Occident Mortal
Occident Mortal's picture

There was once a time when Goldman and JP Morgan were seen as statesman like professional institutions packed full of highly educated and well connected men who would always be able to bring two parties together.

Nowadays these organisations are seen akin to crack dealing pimps, who would slit their own mothers throat to get one step closer to a naive client. If these people ever want to work with you... Lock your door and turn off your lights.

They have truly thrown the baby out with the bath water in their quest for meritocracy and competition.

These are some of the most spiritually corrosive and masochistic environments you could ever have the misfortune to find yourself. The people who work there have to hold their noses for 19 hours a day as they shamelessly scramble for the monetary rewards that would justify this monstrous waste of their young adulthood.

Nobody but nobody whispered on their deathbed... "I'm so glad I missed my mums birthday to work in that pitch book."

or "Son, choosing to work 90 hours a week was the best decision I ever made"

or "I can't believe I wasted so much of my life playing with my children when I could have been in the office, doing work"

These organisations and their culture are truly appalling examples of how NOT to spend your life. Do not covet these people. They are completely lost.

Mon, 02/03/2014 - 20:07 | 4397978 aVileRat
aVileRat's picture

What is deeply ironic is that Sigmund Warburg argued in 1931 that shifting investment dealers from White Shoe sovereign & corporate advisory to chasing “the thundering herd” would only end in a race to the bottom. He was so convinced that pushing stocks/convertable debt to retail investors who are neither be interested in conducting due diligence on securities or understanding the underlying business that he led the family bank dynasty into oblivion vs. chasing the bottom.

While he was about 60 years too late to see his fruits, it would seem the day is slowly dawning where MoMo’s can not get rich quick on 19x dot coms/disruptive money pits. As margin calls start to hit home and the US Election season half-year trend takes hold, I would suspect more funds will start to collapse on leveraged deriv. speculation.

I am going to bet that these six-sigma days are going to start getting more common if not in equity moves, than in market shock to the mean. Their is a lot of smoothed data which needs to be reset in order to match the micro-story with the macro prints.

It's going to be a very fun Valentines day in London & NYC. Mostly for divorce lawyers.

 

 

 

Mon, 02/03/2014 - 19:34 | 4397850 slaughterer
slaughterer's picture

Just have to know how to translate Goldmanspeak:

 

Notable flows in the afternoon were many non-traditional users of USTs buying the belly in small clips that ultimately amounted to considerable net buying.

 

==>  means UST will go down the next few days and these "non-traditional users of USTs" will get wiped out.

 

Also notable, considerable activity in TYH 125 puts today as over 100k contracts were traded by lunchtime. 

 

==> means TYH will surge over the next few days and all the TYH 125 puts will expire worthless.

 

Mon, 02/03/2014 - 19:12 | 4397770 Pareto
Pareto's picture

Nothing to see here folks......move along.  Just another Golmanite talking out of his ass.  Move along.

Mon, 02/03/2014 - 19:13 | 4397774 tocointhephrase
tocointhephrase's picture

The clue is in the first word of the title

Mon, 02/03/2014 - 19:16 | 4397789 Iam Yue2
Iam Yue2's picture

Let''s all pretend that we are surprised.

Mon, 02/03/2014 - 19:21 | 4397799 knukles
knukles's picture

Huh?

 

What?

 

Oh...

...yeah, I'm uh....
...uh...

 

...surprised.

 

You all realize that this may be a major economic disaster what with the Street's demand for coke and hookers being pared back....
Poor trannies'll be out there with their squeegees and smeared makeup.

 

OK?

 

Mon, 02/03/2014 - 19:32 | 4397847 disabledvet
disabledvet's picture

the blow up in credit this go around will be EPIC.

I only pray they're shorting treasuries with a thousand times leverage like they always do

"cuz they never lose."

Mon, 02/03/2014 - 20:13 | 4398031 negative rates
negative rates's picture

Oh yes they did, they lost at 10 to one, and then jumped into the river of denile.

Mon, 02/03/2014 - 19:17 | 4397796 Rainman
Rainman's picture

S&P only needs to go up 30% to hit that 2250 Squid # ONE target in '14. ...hah!

 

Mon, 02/03/2014 - 19:57 | 4397940 disabledvet
disabledvet's picture

that's in aud terms.
hmmmmm. wonder why that is....

http://seekingalpha.com/symbol/FSUMF?source=search_general&s=fsumf

Mon, 02/03/2014 - 19:23 | 4397809 Spungo
Spungo's picture

How does GS still have clients? Would you trust me with your personal savings if I had a long track record of being completely wrong and I went bankrupt just a few years prior?

Mon, 02/03/2014 - 19:24 | 4397813 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

This volatility will make you old!

Mon, 02/03/2014 - 19:30 | 4397832 chump666
chump666's picture

I rememberer when 2% neg sell offs were the norm in the old days.  Now we have that academic (Fisher from the Fed) telling us that a correction is expected.  Thank you, you central planner and commie a-hole.  Asia will pick up the slack.  Gold selling, risk/dip-buying on.  Running o/n shorts on futures will have you fleeced.  Selling is not because of Taper, it's EM markets, China (America's creditor) looking like it will blow apart.  Yelland will then cancel Taper buy the whole short end.  A market crash at 20% will have heads turning.    81 on the DXY is not a safe haven trade.

Mon, 02/03/2014 - 19:30 | 4397833 Jack Burton
Jack Burton's picture

This year is very young. Thus the worst day of the year is hardly a worthwhile gauge of today's trading. In fact, over the years the steady flow of meaninless comparisons of figures seems to grow in irrelevacy.

"Existing home sales have reached a 4 month high compard to last quarter meaning that people are now actively seeking that dream home. While consumer credit advanced at a new all time 3 week high. Orders for durable goods are holding steady at their recent 5 month high."

As if this means anything.

Mon, 02/03/2014 - 19:32 | 4397837 Goldilocks
Goldilocks's picture

Nena - 99 Luftballons (Official Music Video)
http://www.youtube.com/watch?v=6wMeOSED5W8 (3:24)

Mon, 02/03/2014 - 19:57 | 4397953 chump666
chump666's picture

F*ck yes. 

Mon, 02/03/2014 - 19:34 | 4397840 Dr. Engali
Dr. Engali's picture

I can summarize for the squid:

We told our clients to buy, so naturally our trade desks are selling. Soon we will tell our clients to get out, and the trade desk will be buying.

Have a nice day. Hear take this complimentary Spider-Man towel on us.

Mon, 02/03/2014 - 19:44 | 4397895 toros
toros's picture

If today was "Serious Pain" then they are going to need some strong pain killer going forward.

 

 

Mon, 02/03/2014 - 19:57 | 4397949 JohnG
JohnG's picture

There's Fentanyl laced heroin going around I gather......

Mon, 02/03/2014 - 20:35 | 4398130 mt paul
mt paul's picture

that stuff....

would whack the whiskers

off a walrus ...

Mon, 02/03/2014 - 20:05 | 4397977 J J Pettigrew
J J Pettigrew's picture

Werent they accused of taking the other side of the mortgage securities as they were selling to their "clients"?  Werent they accused of causing the Greece fiasco?  So much smoke.....

Mon, 02/03/2014 - 20:29 | 4398114 JoeSixPack
JoeSixPack's picture

Too much thinking.  Putting on ESPN to watch Superbowl highlights, I mean commercial replays.

Mon, 02/03/2014 - 20:38 | 4398166 q99x2
q99x2's picture

Good hope people get really pissed and begin to lock up Goldman criminals. Rarely in history did societies have a better target for scapegoating.

Mon, 02/03/2014 - 20:50 | 4398219 wiseindian
wiseindian's picture

Seriously though - wouldn't Yellen use shitty numbers (housing, PMI) and of course weather and basicallly untaper? I mean isn't this tanking market and dirt numbers mean un-taper is pretty much guaranteed?

Mon, 02/03/2014 - 21:26 | 4398362 Hail Spode
Hail Spode's picture

If the pain gets serious for the markets when the QE herion dose is reduced from 75 billion a month to 65 billion a month, what will the pain be like when the completely cut the supply? That is, the amount of fiat levitation is cut from 75 to 65 billion, and this happens.  What will the DOW be when there is no QE pumping it up? Or will we ever get a chance to find that out?

Mon, 02/03/2014 - 22:24 | 4398591 Billy Shears
Billy Shears's picture

This economy is never going to get better until all the bad debt is liquidated and, unfortunately, for this to happen interest rates need to go UP, not down. If the realitly of all the bad debt in toto were recognized and all liquidated good, unimpaired capital would be so scarce as to command an astronomical rate.

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