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There Is No Mystery To Today's Selloff
There is no surprise to why stocks are selling off today.
If anything, it was yesterday's surge that was quite shocking and caught everyone by surprise, paradoxically doing more damage to investor sentiment than an orderly decline would have done as it once again spooked retail investors by the senseless and very whiplashy moves the market is now subject to. Case in point: after yesterday's multi-year euphoria, investor sentiment is back to record lows.
As for the two violent selloffs this week: there is no mystery. Recall that Deutsche Bank warned late in the summer this would happen for one simple reason: there are just three more weeks of POMO left after which the Fed's balance sheet flatlines, and with it, the S&P500. The only question is whether those who "sell ahead of everyone else", manage to take the S&P far below "unchanged", as prior QE ends have done, proving once again that it is all about the flow not the stock, and as a result the Fed will once again have to resort to even more QE.
The risk sell-off we've seen in recent weeks frustrates us a little as the chart we've published most this year has pretty much predicted that tougher times would come around July. We've been paying it a lot of attention for over a year now but decided to wait until the autumn before we raised the warning flags. The chart in question (included in today's pdf) is the one showing the Fed balance sheet and the S&P 500 (as a proxy for risk generally). As you can see, since the Fed balance sheet was used as an aggressive policy tool post-GFC, the graph suggests that the S&P 500 is well correlated with the size of the Fed balance sheet with the former leading the latter by 3 months. Given that the Fed have recently signalled that they will likely be finishing expanding their balance sheet in October, 3 months before that was July. This is important as virtually all of the mega rally in the last 5 years has come in the Fed balance sheet expansion periods. The other periods have been more challenging for markets.
And then this a week ago:
The risk sell-off we've seen in recent weeks frustrates us a little as the chart we've published most this year has pretty much predicted that tougher times would come around July. We've been paying it a lot of attention for over a year now but decided to wait until the autumn before we raised the warning flags. The chart in question (included in today's pdf) is the one showing the Fed balance sheet and the S&P 500 (as a proxy for risk generally). As you can see, since the Fed balance sheet was used as an aggressive policy tool post-GFC, the graph suggests that the S&P 500 is well correlated with the size of the Fed balance sheet with the former leading the latter by 3 months. Given that the Fed have recently signalled that they will likely be finishing expanding their balance sheet in October, 3 months before that was July. This is important as virtually all of the mega rally in the last 5 years has come in the Fed balance sheet expansion periods. The other periods have been more challenging for markets.
Another way to see it:
In other words, want to blame someone? Blame the Fed. But don't forget to also blame the Fed for the most artificial and rigged "bull market" rally in history from those distant 666 lows, which, if the Fed is indeed out, are coming back. But of course, the Fed is never out: all it takes is one market crash and the Princeton economists will be right back to micromanaging the terminally broken US capital markets and economy until there is nothing left.
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Based on the "BS" I see from the Fed an other central bankers, I think that curve may be wrong...
Aren't POMO injections pretty small now? How were they still holding up anything?
Also: Ann Coulter RIPS Republican Party's lame election "strategy" http://tinyurl.com/ozhq7dh
Repubs want to lose and I am not being humorous at all
Issue is that Dems want to lose also and I'm not being humorous at all
Who is going to achieve the goal?
One will win, everyone else loses.
ICANN stated he shorted SPY as a hedge....righttttttt
Can't we just buy the dip and all will be well? Prosperity can be bought... right? /sarc
The only question is whether those who "sell ahead of everyone else", manage to take the S&P far below "unchanged", as prior QE ends have done ...
Holy Jesus Fucking Titty Christ!
I did not know that "QE ends"! I thought the name changed but the game never changed. I guess GS and JPM will have to start printing theer own dollars, now, instead of letting the FED do it for them. Anything is possible and anything is legal!
There are no rules.
There are no laws.
There is no hedge.
There is just the knowledege we will end as worm's meat after a short miserable, unproductive, unsatisfying life on the sidelines of lawlessness, on a rock circling a star somewhere between eternity and nothingness.
Maybe I can start smoking again.
The ebola ponzi seems to be falling flat on it's face - who cares - whoopie we're all gonna die.
Oceania needs a new enemy to fill the hypno tube for our daily 15 minutes of rage. How about, err, Peanut Pan Peanut Butter, or Lap dancers, or bunz up an kneeling nubilites begging to give us pleasure - just like that nasty little pamphlet in our Daddys' bottom drawer!
Today's question: Did Mary have an orgasm when g*d sired the J-man?
I have been saying for long that it is the flow that matters while the geniuses at the FED have been saying it is the stock that matters, in a few weeks we will have the answer, since the stock will not change, but the flow will reach zero. Up to now I have been proven wrong, we will see... I can't wait
I don't know what this "flow" or "stock" is; I never read any commentaries of any kind. No one knows anythng. There is no reason. Sometimes, t he chart, which is the market itself talking to you, t ells you something. other t han that t here's not hing.
How does ANYone still believe that stupid red/blue crap.
They made a choice. The wrong pill.
Is she still around? I thought Matt Lauer had the execs at NBC shipped her overseas.
Frankly I have seen snails with more intelligence than her.
'she' is rumored to be a tranny... imho, quite possible.
well based on the last few thorough audits of the FED, we are certain no back door funding is going on... , er what? no audits... never mind.
Off topic:
Dutch officials want to know why dead passenger found wearing oxygen mask on downed airliner in the Ukraine http://www.nydailynews.com/news/national/passenger-malaysia-airlines-fli...
Uh, maybe he put it on when the Ukrainian fighter jets started shooting at them?? Missle would have been no warning. Sorry propaganda machine- you lose.
I saw an ass-fire goin down Woodlands Parkway today....off topic also
For the propaganda machine, facts don't matter. Specially if you can control their reporting. I was part of big news two times in my life, when I saw the reporting the next day, I just couldn't believe it. I was shocked flabergasted by the distortions, but after a few days got tired of telling what really had happened.
That whore will say anything in order to get her name mentioned. The bottom line is there isn't a damn bit of difference between the two parties when it comes to policy and spending, and since there's no money left to spend nobody wants to be hung with this mess.
Yep, how will the party in power explain it when the EBT cards no longer work.
"Aren't POMO injections pretty small now?"
Watch for rotating Belgiums around the world
just wait for 3:30.
It's all Bullshit!!!
That comment sir, may get you banned.
I would prefer to not read any of this explanation after the game, and look at the ES chart, instead. If you look at the chart you see a down channel at around 45 degrees angle; very well defined and established; if the market gets back to the top of this channel, you can short it again; but only until it gets close to the bottom of the channel, so as not to t ake risk. Since it is a down channel we're trading; we sell t he rallies and cover at t he bottom of the channel; we do not buy any dips. no one can say which way it will break out of t he channel, but studies of markets by major university mathematicians show that a channel like this usually breaks out of t he bottom side. to be frank about it' none of this conversation about whether or not t here's any myst ery, etc. etc. is just windage. it doesn't mean any thing. no one knows what any r easons are.
I think Fonzannoon would disagree with this article, but who can say for certain since he's been BANNED for disagreeing with the Tylers.
Good riddance to that fucking idiot!
Yes, everyone who disagrees with the ZH party line should be banned. We certainly would not want to have any vigorous debate or name calling in the comments section because someone's feelings may get hurt.
EDIT: I think I may know what Fonz would have to say, but just a guess (wink, wink)
"And as we pointed out after the latest FOMC meeting, we are now in a new regime, where gold benefits more than stocks on further currency
>devaluation. Period."
>
>Tyler Durden on the original Balls to the Wall Tepper speech almost exactly 4 years ago...
>
>http://www.zerohedge.com/article/david-tepper-balls-wall-long-unlevered-fed
Ya know, I missed the altercation that led to Fonz leaving- I guess he did not go out like Francis.
I didn't see the actual post, but it had to do with this site turning into an MSM blow horn as it related to the Fergusson shooting. I think the real reason had more to do with his opinion about stock versus flow, and some other touchy issues, but I'll probably be banned for voicing that opinion. Nice knowing you guys if so.
Right, me too- see ya at FEMA camp 13L.
What exactly did the Fonz say to get banned? And how do you know? He was just on here yesterday.
http://www.zerohedge.com/news/2014-10-09/ebola-pandemic-hits-germany-tur...
A lot of comments on maybe why. Pretty far down in the section.
Will miss the Fonz.....but I guess he jumped the shark...
ZH or any private forum is subject to Admiralty Law. People who accuse Tylers of censorship are barking up the wrong tree and probably have a hard time distinguishing public from private property. This is not a democracy - it is a private site the code for which someone had to write. It exists at a domain someone had to register. It generates traffic that someone has to pay for. It is by every definition "private property" where you and I are invited guests.
You may argue over free speech if you are a paid subscriber to a service - a shareholder of sorts (provided that the conditions are negotiated). Otherwise, to you participation is a priviledge. You have no rights at ZH. You are, however, not prevented from registering your own domain, and writing whatever the hell you want there. Tylers will not restrict you from going elsewhere and expressing your controversial position. Their interest here is making sure people play nice with eachotehr, which over time leads to subscriber growth and increase in ad revenue.
ZH is a business. Every web site is a business. Internet is not free. Web space is not free. Traffic is not free, so don't be confusing your ability to post material here free of charge with "god-given inalienable rights". One has nothing to do with the other.
Tylers can and will manage the forums the way they see fit. I think they've been doing a great job keeping the site both, informative and entertaining year after year. I'm a happy camper and would like to express gratitude for the priviledge of being allowed into the club.
Once again - a priviledge, not a right. I have my own web site where I get to set rules. That place is my virtual jurisdiction. This place is not. It is not public property and it is not a democracy. It's a service to which you have no more right than to free healthcare.
Give it a rest. No one is saying Tyler violated the Constitution or some such shit. Of course the Tylers can decide to ban all of us and decide only to post articles about dildo manufacturing processes henceforth, but some of us don't like the direction this site has taken and we miss our comrades who have either left or been banned. There is no other site like this one that I'm aware of, so guys like me keep coming back as a Plan B. I expect I'll be banned for sticking up for Fonz and/or for some other reason, and that's Tyler's right. And of course it is my right to stop coming here. I believe the Tylers would do better in the long-term sticking to their original formula for success. But who knows. Some people like New Coke.
You've taken the persecution complex ball and ran with it.
Bullshit. This site is built upon fighting for the freedom of opinion. Don't give me this "priviledge" vomit. Unless you mean it's Tylers "priviledge" to decide which knowlege deserves oppressing or not. Read the fucking donation page:
http://www.zerohedge.com/donate
DONATEVoluntary donations aren't subject to contract law. Even if you give money to the site, it does not automatically grant you the right to determine content.
Whatever principles site is built upon, and regardless of the way you interpret them, it is still private property - private domain, private web space, private service. The owner of private property has rights. Guests of private proerty have privileges. You and I don't own the site. We are therefore privileged guests. Tylers are the owners. They have rights here. You and I don't.
Don't confuse voting privilege with rights. Spreading such false notions is the job of our beloved politicians. Being allowed to vote comments up and down doesn't make you a site owner. The only option you have here is to agree or disagree, express your opinion and see what reaction it gets. You can observe passively or participate in discussion, but regardless of the choice, you are still a guest. A 1000 comment upticks will not make you the owner. A $1000 donation will not make you the owner. A right to free speech does not imply free distribution of your opinion at someone else's expense.
"Whatever principles site is built upon, and regardless of the way you interpret them, it is still private property..."
There is no interpretation. I just pasted the fucking words above and they're black and white. It is absolutely a priviledge (or was) to be a member. But this site has achieved all its success following and supporting the priciples I outlined above. If you can't see how that hypocritical, then I can't help you. Do I deserve my priviledge removed because I disagree with you?
ZH is not a country. Technically it does not have to comply with any rule typically attributable to a country. Tomorrow the disclamer may say that every user whose name begins with an "R" gets banned every 2nd Wednesday, and that'll be fine. It is a virtual space - a ship in a virtual sea. An admiralty law is all that applies here. Those who dislike it, can swim for shore or walk the plank?
When it comes to your privileges - you and I are both guests here and on equal terms. You don't get to decide for me. I don't get to decide for you. Tylers are the owners and they can do whatever the hell they want. It's their site.
If they shut it down tomorrow, will you go out and petition against it? Petition whom... and on whose behalf would the complaint be? A nickname with a picture of a skull wishes to express his desire for protection of rights. Ha! As far as I know, rights apply to actual people - not fictional avatars with pretend ambitions.
So your argument essentially is that members don't matter? Your caught on rights and privileges. Your trying to make this about something it is clearly not. Of course they can do whatever they want. Who ever denied that???
"Tomorrow the disclamer may say that every user whose name begins with an "R" gets banned every 2nd Wednesday, and that'll be fine. It is a virtual space - a ship in a virtual sea."
This is quite possibly the absolute stupidest thing I have ever heard. WTF??? You think by misdirecting my argument, you are therefore right. Removing a valuable member for difference of opinion is historically not a good idea. It's that simple. Don't write great posts about government suppression and then suppress members. Nothing to do with rights or privileges.
"...rights apply to actual people - not avatars."
Lastly, do you work the NSA?
NSA wouldn't be schooling you about rights or the Constitution, I assure you.
Members don't matter? Now you're twisting words. Members do matter. ZH readership grows and that's why it's criticlaly important to moderate comments to ensure it continues to be so. Tylers do a good job and I complement them on that. I've been to other forums where admins took a passive approach, and it ended with disintegration of the community.
You seem to have no understanding of what rights are, or the difference between virtual and physical jurisdictions, so no pont discussing them with you.
Regarding removal of a "valuable member". Well that's your opinion. One's treasure is someone else's trash.
You "schooled" me. Bravo.
After QE 1 sell off
After QE 2 sell off
After QE 3...
Sell off? I think so.
and treasury yields dropped.
a fact none of the "experts" ever care to mention
Todays a bit of an odd one, one would think treasuries would be rocketing....
But then again...QE Japan and QE Europe just starting...
Gold/Silver Bitchez
I'm glad you mentioned that. I had to stay up all night to baby sit the Stawk Market; because I had put money on it; and I was noticing there was a hell of alot of buying going on in Silver and G old. Overseas, in bullion. Somethings making some people nervous. Time for my nap.
Neptune in Pisces = oil & gas found virtually everywhere, combined with a weak global economy
Next week: Jupiter exits USA's 8th house (cheap credit); kiss that goodbye
"Rational reason": Oil prices "soak up" US dollars, if oil craters, what's left to the Fed for a "sponge"? A: higher i-rates
Salah = Cosmic Muffin (D.M.)
This theory implies that the 'BAD news is GOOD news' phase of the market will return! Whoo hooo! Bad news = more QE on the way! What a fucking farce this all is.
and boy howdy, do we have some BAD news FLOWS going on right now!
Do we ever... FLOWS here and FLOWS there. What's a biohazard bag to do?
Are we having fun yet?
Former Fed Governor Meyer: Velocity of Money Means Nothing.
Former Federal Reserve Gov. Laurence Meyer told CNBC Tuesday that velocity of money—the rate at which capital is transacted in an economy—shouldn't concern markets, and he dismissed the metric as a guide in setting central bank policy.
The concept is not very useful, Meyer said. "Monetary policy is about affecting rates, which affect financial conditions and affect aggregate demand."
Velocity of money refers to the rate at which money in circulation is spent on goods and services, and economists use it to determine the expected rate of inflation. An economy with a higher velocity of money can expect a higher rate of inflation.
Retail: 'knocks on the door of the market' - Hello?!?! Is anyone in there?
Market: No one here but us algos.
I sold yesterday's rip ;)
not a chance the FED stops buying. QE-4EVA
This is not a 'sell off'.
This is the Fed allowing the index to 'float' downards.
If the Fed didn't hold this market up a long time ago it would have gone to the dogs.
Don't be fooled.
No mystery for me either. When my mainstream fuddy-duddy relatives are finally concerned about ebola, the time for the smart money to exit is here and now. A lot of people on ZH talk the talk, but they don't walk the walk. Just a fact.
The first graph shows the the size of the Fed balance sheet (lagged by 3 months) is correlated to the S&P. And since flow is just the rate of change of the stock, that matters also.
Additional considerations are that the federal deficit is projected to shrink to "only" $486 billion, and as Hussman showed in one of his commentaries, massive federal deficits were driving corporate profits higher. More controversially, the US is trying to crash oil prices to take down Russia, and the way to do that is to cause a worldwide recession/depression, which would obviously lower corporate profits.
dont u just love the phony Gold and Silver paper markets just sitting n place while the EMPIRE burns...
yeah, ok...
Apmex delivering today...
DEATH TO THE MONEYCHANGERS...
"and as a result the Fed will once again have to resort to even more QE."
With Fed's off again on agan off again on again QE signals I can only wonder if somebody is telling them (off the record of course) "stop devaluing your currency or we'll devalue it completely, we have more than enough treasuries to do it".
hedge short funds goosed the vix...ala fat finger...to recover their losses from yesterday's rally...see even when you read the fed wrong...is still ok if you can manipulate the market with enough money
the gatekeepers are about to get squeezed...titration, taper up continues...up, down and changing speeds..
Down 2.4% FTSE, 1.8% CAC and 1.2% DAX futures, and pretty soon you're talking big money:
http://www.investing.com/indices/us-30-futures-advanced-chart
Bonds are sure in a world of their own... The 10 year is pretty much flat.
Everyone piled into cash.
The market has a fever and is vomiting.
So is it because end of QE , Ebola, , Obama, World growth, Europe , China, Japan, etc etc?
Yes.
The precious fed is powerful, but not all-powerful. Their power, like all earthly power, is limited. They can't weather a tsunami. Ebola is real. Ebola is a tsunami.
A leaky hot air balloon does not just 'flatline' after stopping the volumes of air being pumped in to compensate for the holes in the balloon.
"Never Sell A Quiet Market After A Rise".
This is not a quiet market.
So maybe that's the reason for the recent violent suppression of the PM prices. Market crash imminent, close muppet exits.
The only reason for taper is to be able to untaper
I'm curious nobody is seeing the connection between last week the first charges against an HFT spoofer and the stock market getting all wobbly.
No spoofers = market collapse???
you dont explain yesterday without HFT bots doing some very heavy lifting....
Eventually the masses to get the point that if the market couldn't survive w/o QE, then the it is really that weak, and so no reason for stock gains. This sure fells like people are waking up...whicih probably means we are two years away from the big correction.
They cannot allow a mammouth sell-off again and bring total panic to the financial markets. They will keep printing no matter what.
admitting its shitty going into Nov 4, not likely..... I think Ebola will get spun into an event
Free Fonz - Vote up
Jail Corzine - Vote up
This poll brought to you by Diebold.
Wages not rising, factory orders not rising, PMI trending down, ISM trending down, construction spending falling, oil down, gold up...BULLISH!
We have all been waiting for the crash.....maybe today is the start....or maybe not.....I figure the fun starts soon enuff....I have my rounds
Some folks do believe in Red or Blue or Purple. Yes some people do believe some things are better than others. Unlike the geniuses here. Get off your little pity pot and take a stand for something instead of preaching the apocalypse. It gets old and no one likes a bore. Cheer the fuk up you bunch of sad sacks.
No mystery at all as predicted here over the weekend...
http://www.globaldeflationnews.com/sp-500-indexelliot-wave-update-for-we...