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A Stunned Wall Street Reacts To Today's Epic Move
The first report summarizing today's stunning market action comes from FBN's Jeremy Klein, who is out with this blurb:
In the first 15 minutes of trading the S&P 500 E-Minis traded below the S&P 500 cash index despite a fair basis, according to Bloomberg, of -6.72. This is unheard of and something I have never witnessed in my near fourteen year career on the Street. I can only conclude that many large institutions threw in the towel on the Open in wake of the dislocations in not only stocks but also treasuries.
As a result of the whiplash, Klein, who just over a month ago first, and so far only, called for a bearish correction, has turned bullish again because he now expects "a likely positive Fed meeting on October 29 to help fuel a Santa Claus rally." So, QE4 then?
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You hit it right on the head, er "Spot On"
Down 372 by close today...or up 37...
Same market either way. This is all so very BOGUS!
Welcome to the United States of Japan.
Aging stagnant population, endless QE, debasing currency, permanent state of stagflation.
Until one day....
Japan will be the first to blow.
Japan will be the first to blow.
Japan's survival depends on blowing... the FED.
its actually the opposite... the FED keeps pissing off Japan and causing them to do more printing to keep the yen lower vs. the dollar
its a global currency race to the bottom
Tecno, no Japan doesnt blow first. They are not dying of PC multicultralism.
long
puffer fish...
14 years on the street won't even get you a guest column at
KING WORLD NEWS. At KWN, You have to be a "Legend."
Legend Warns We Are Very Close To All Hell Breaking Loose
I believe ugliness lies ahead. I love the way it is always being kicked out a year or two and never going to happen tomorrow. It is as if we can't handle what is coming at us and need more time.
For a long time I have been trying to develop a scenario for a market "super crash" and a reasonable map that would arrive at such a situation. Below is an article looking at how it could happen sooner rather than later.
http://brucewilds.blogspot.com/2013/01/flash-crash-on-steroids.html
QE4 QE5 QE6 ...
I wonder how one would test a new tool designed to stem a market crash?
Yeah t hat's an interesting thought.
yes indeed. it's a good thing "they" just finished a crashing market exercise no?
Shortly after the open, I switched to my Dow 15,000 hat. Then the PPT and Kevin Henry jumped in and had to switch back to the Dow 16,000 hat. :(
But, my popcorn is very tasty today, and have faith that this broken market will plunge like the Titanic soon.
/s
If the Fed embarks on QE4, with Treasury yields already below where they were during the entire QE3 period, then they would be explicitly saying they are targeting the stock market.
They seem to have trouble keep it nose up at the end of the day They had 1.15 B to play with today, bet they shot most of that off early.. 250 mill tomorow and nuttin friday... At least publicized values...
...."my fourteen year career on Wall Street".......lmao
I got fukin' Tee shirts older than that.
Kid hasn't even started shaving.
LOL
Just got a pop-up advert listening to John Williams for a Schwab Franchise.
Canyasmellit?
Give us moar free moneys (QE) or the election gets it.
Bangalore: Listen Dealer.
That reminds me. One item on my "CHANGE" list is something I termed "IDENTIFIER".
I would like all Zero's to racially identify themselves at the end of each comment. All you have to do it put: White, Black, Yellow, etc.. OK? Easy! That way we'll "KNOW".
I'll start:
Indian.
LOL Cracker.
OK ..I'll go second..
WHITE.
How do I get on the AM 'Fed Huddle' distribution list, so I know which way to trade?
So.. the hope is from Wall Street that by dumping stocks they can force the Fed's hand and get them to introduce more QE?
I guess you weren't trading back in 1987....
Bet he never saw 5 points on the long bond either......neither did I !!!
which "epic Move" is that, the initial 350 point plunge, or the subsequent ramp?
Quick!, somebody call Bernanke!, he'll know what to do!!!!!!!!!!!!!!!
Jeremy Klein believes that his "near fourteen career" - half of which has only existed under QEverything - qualifies as a historical perspective. Seems like a nice guy, writes intelligently, has obvious enthusiasm...but is sorely lacking perspective or the understanding that, in the grand scheme of things, he's seen very little. Someday he's gonna look back and laugh at himself..and that'll be a good day for him.
Well, I am glad someone finally decided to flush the floaters down the toilet.
We all talk about the 1% controlling so much. When they decide to dump, we all feel it.
Do you think households earning less than $5 Million a year are going to have an effect.
Ebola. That is all.
Obvioulsy, the Government and the News are trying to create a national hysteria as a prelude to martial law.
More and more people are realizing that the market is just a betting parlor. Buy a share of a publicly traded company to become part owner of it. What a fuc#ing joke! Walk into any company and say you are are shareholder and see what the security guards does to you. LOL.
https://www.youtube.com/watch?v=qVW3R5ehrvo
So is this what the Satan Signal was all about?
http://www.zerohedge.com/news/2014-10-09/did-todays-satan-signal-sp-futu...
We get more evidence each and every day that the New Normal is all about being Abnormal.
Billy-"but what about ma & pa? Theys been put'n all their vest'n in fourinonekays"
Cue Ave Satani....
https://www.youtube.com/watch?v=MCrEeqmjOBo
Ummmm ... this is nuts, interest rates plunging and stocks plunging, too, on "growth" fears? WHOSE fears? Nobody in the real world expected real growth. Did someone sober up Janet? Did she suddenly start reading ZH?
15400 here we come! Maybe in the next hour, probably by next week.
But then? Dunno. Could still close the year back over 16000.
Apparently the Fed decided to pull in the reins on the PPT before the end of QE. Bit of an experiment. Not going well, not when rates *and* stocks both plunge. Something is broken here. Even if it's only a bit of reality poking into what have been crazy markets.
The plunging rates are the anomaly.
My favorite McClellan indexes suggest we keep declining for at least a few more days, first time since mid-2012 we've had a market with even this negative momentum. Normal markets go *more* negative than this. So hold onto your wigs and keys.
no one wants to hold rubles or euros right now so what's the choice? - Treasuries or US stocks [Dalio bulit his whole business on that]. so far not many see PMs as a choice - for reasons that remain obscure. the yuan will be a good possibility when China discloses its gold position implicitly or explicitly backing it
The Plunge Protection Team must have a slow connection
14 year career????
WTF?
A Pup.....
FUCK the "re-action"....this is damn near fun!
Just in case any of the academic imbeciles at the Fed or NYFRB/Citadel are wonderiing what it might be like to actually have a soul consult the following video, and pay attention this time!
Handle w/care.
https://www.youtube.com/watch?v=L8s9dmuAKvU&index=2&list=RDHC6AQgksK4giI
CNBC boob puppets are rationalizing a correction due to ebola, placating with diversity of the over bought bond markets and speculating on a near bottom. Justify their thinking with expected corporate earnings.
Anyone here think they are on to something?? Neither do I.
On something maybe; on to something; if it's as you say; no, not really.
I see marketwatch is rebroken again... :/
Loser! 14 years andhe's a expert? WTF? us gray beards been stacking for years!
Fuckin' ell, my great grandad was stackin in THE LONG DEPRESSION, the gay 90s, and WWI -- till Spanish Flu took him out on the streets of Williamsburg right at the foot of the bridge. All that stackin couldn't save him.
Sooooo...it's not going to 20,000?
"Well fuck it, I already bought my 20,000 t-shirt"
- Paul Krugman
Be careful what you wish for. Yeah, it might go to 20,000 in the beginning of 2016; but what could you do with the "money"; by that time inflation would be big news.
Its a very satisfying feeling: knowing that a train wreck is coming and that you've already got the deckchair out and a beer in hand.
Fuck you all cunts who've been cheerleading this insanity for half a decade. I wish you all the pain in the world as we might actually be seeing vengeful reality coming for you.
Plus: I added to the stack this morning just before this hilarious show began. Fuck yeah!
Where is Krugman? I thought QE wasn't inflating stocks. What say you now, dumb fuck?
Did he really say that QE wasn't inflating stocks? That's amazing. Obviously, I don't have time for the NYT; they outted themselves long ago. I wonder how he arrives at conclusions like that ?
With a gun to his head and his pockets full of counterfeit dollars.
Is it coincidence that the anticipated crash is coinciding with an ebola outbreak in the US?
>>>
A Stunned Wall Street Reacts To Today's Epic Move
<<<
_Epic_?
I see about 2%, Oct 87 was over 20%.
Too much emotion!
Watson
I have been thouroughly enjoying the show for the last few days. I hope this is just the appetizer.
Whatever it takes to get Maria Bartiromo to leap from the top floor.
Heh heh heh.... suckers.
if yellen goes QE4, it will be the most blatant "Fed is a nuisance that gets in the way" example and will render this shit show irrelevant
there will be calls for yellen's head if she does this
18T debt thanks to barry - many will call for barry's head too
it's almost worth QE4 to see these two fucks hang
18T debt thanks to barry - many will call for barry's head too.
I'd say Barry, the man who thinks there are 57 States and that Austrian is a language, has no idea about the significance of the deficit, and cares less.
Now of course things can change, and only a fool doesn't change his opinion when the facts underlying it turn out to be different than expected. But with that said....
The Fed will cease QE on schedule. The taper is not only on, it won't be suspended. And, withdrawing liquidity, that is, allowing short rates to rise, is on the table too, and almost-certainly sooner than you think.
It doesn't matter if the market sells off, even if it sells off hard.
Here's why.
If you remember I have repeatedly pointed out the utter insanity of QE in the first place. It is much like snorting heroin -- you get a high immediately but the price is spread out. That's for the simple reason that bond portfolios work that way.
In other words, with the possible exception of a few small individual "investors" who buy a single bank CD, nobody (in their right mind anyway) buys just one bond. This is particularly true of large investment pools and those who underpin the bond market, such as insurance companies and pension funds.
All of these entities ladder their bonds.
If you're unaware of how this is done, it's simple -- the people who buy these things want a more-or-less "constant duration" because they are intending to meet some expected expense with the interest coupon. They attempt to match that duration against their perceived risk, and adjust for interest rate environment both today and what they expect tomorrow.
So let's say that after much grinding of numbers Insurance Company "A" determines it needs a 10 year duration in its portfolio in order to earn the return it wants, hedge the risk it wants, and match the two against incoming cash flows and expected claim payments.
Starting out (when the company is formed) it thus buys a set of bonds that look more or less like this:
10 year bond, 1 year to maturity.
10 year bond, 2 years to maturity.
10 year bond, 3 years to maturity.
and so on.
Now they might mix some stuff up in here too; if you think the curve is going to steepen (that is, long rates go up more than short) you would prefer to buy a 5 year bond with 3 years to maturity over a 10 year one, all things being equal (but of course they never are because the yields at those two times of issue were almost-certainly different!) The point, however, is that what you end up with in the portfolio looks like this:
10% has 1 year to maturity.
10% has 2 years to maturity.
And so on.
By the way, individual investors with a lot of money do this too. It's very popular among muni investors, for example, provided you have enough money to make it work (six figures for starters, on up) because individual bonds are typically sold in $10,000 increments and if you have enough to capital to do it you can pick exactly what risks you want as opposed to buying a mutual fund where someone else makes those decisions.
So now The Fed comes in and does QE, buying the long end. What happens? Long rates go down. A year on your 1 year to maturity bonds mature, and you must replace them. With what will you replace them? All things being equal, when you replace them you will get less interest income from the new issues.
So let's say the effect of QE is that your mortgage goes from 6% to 3%. This is a 50% reduction in your interest payment. But -- that MBS gets sold into the market. MBS have a typical maturity profile of about 7 years (which is why the 10 is the benchmark; it's the closest), fluctuating somewhat. When rates are high and falling the profile is shorter (because people refinance), when rates are low and going higher it extends (because you're a nut to refinance a 3% loan into a 4% one -- nobody does that unless you have to sell and move for some reason.)
So the guy who buys it gets a 50% reduction in his interest income, but that's only 1/10th of his portfolio. For the first year, anyway. As such his impact the first year is 5%, then 10%, then 15% and so on.
We're roughly five years into this crap now.
The pension funds and insurance companies that are the backbone of this market are probably doing plenty of screaming, and with good cause. If this keeps up their cash flow will collapse; they can't absorb it. Further, Bernanke and the rest of the Fedknow that factually the damage they took on by buying those instruments during QE cannot be gotten rid of either; it has to roll off, because if you sell that bond you're going to take a capital loss and crystallize the entire loss right now instead of spreading it out!
This is what is forcing the end of QE. It is also what is going to force The Fed to pull liquidity and let the short end come up.
They don't have a choice but they will never breathe a word of this, because to confirm it would be to give a clean opportunity to gang-bang all those bondholders by Hedge Funds and others who can play in the derivatives market, andthat could (read: probably would) set off a crisis far worse than 2008.
That's my read on it.
We'll see, over the next months, if I'm right.
----------
Denninger on RT about this:
https://www.youtube.com/watch?v=hX-okf026z8&feature=youtu.be&t=17m57s
Who cares about the stock market, 300 points - whatever. The real reason people should be concerned is the 10Y treasury moved 40 basis points today. Most people don't realize how big a move that is. So many hedge funds are short treasuries and are getting disemboweled today.
At some point credit and counterparty risk will start to creep in again. Will the fed become the lender of first resort again? Will we see banks begin to get shaky?
Game on!
Don't be surprised if we see a 600 point UP day...it isn't all about how far you drop on a single trading day, it's about the swings...those sickening pops and drops...you don't know WHAT direction you're supposed to be going in. That's the sign things are getting ready to do something unpleasant. And the drop from here would be epic.