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Bonds & Stocks Drop Amid Crude Carnage; Bills, Biotechs, & Big-Boy-Toys Battered

Tyler Durden's picture




 

For everyone who rushed to the safety of stocks as T-Bills collapsed on US default fears...

 

The moment when reality sets in... Stocks suddenly realize that a collapsing T-Bill market is NOT bullish...

 

The last time 1-month yields were in this panic mode, VIX was over 20...

*  *  *

Trannies love weaker crude prices today... (guess what happens next)

 

and algos did their best to drag stocks back to unch (Nasdaq was ugly - see below)...

 

The last two days have been somewhat crazy in terms of equity futures swings...

 

Not a technical market at all... Notice th eperfect run to the 100-day moving-average in S&P cash (driven by selling pressure on VXX), then immediately stops... (and again top run to unchanged into the close)...

 

The last few days have been very 'odd' in VIX with gaps and craps everywhere...

 

FANGs FUBAR...

 

Biotechs Brusied...

 

HOG Hammered...

 

Tesla Tanked...

 

"You get a short squeeze, you get a short squeeze... everyone gets a short squeeze"

 

Treasuries were broadly ugly today... with the same selling until Europe closese pattern...

 

As 10Y yield caught up to stocks OPEX-ramp (note we have seen this flush before, right before stocks give way)...

 

The USD dumped and pumped to end the day unchanged against the majors... with JPY weakness pumping up stocks...

 

But the USD held on to gains against Asian FX...

 

Commodities were mixed with precious metals drifting higher (even as the USD gained) while crude tumbled... (of course the post-NYMEX close panic-buying ramp happened)

 

WTI Crude (Dec contract) hit its lowest since October 2nd intrday today...back below $46...and back below the crucial 50DMA

 

And Oil volatility and the underlying ETF are converging...

 

Charts: Bloomberg

Bonus Chart: In case you needed reminding.. fun-durr-mentals

 

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Tue, 10/20/2015 - 16:09 | 6690934 Kaiser Sousa
Kaiser Sousa's picture

markets...

as real as Mexican wrestling.....

Fuck off......

Tue, 10/20/2015 - 16:19 | 6690997 Yiha
Yiha's picture

I shit markets.

Tue, 10/20/2015 - 16:25 | 6691031 SafelyGraze
SafelyGraze's picture

big boy toys being battered?

well! the things you say!

hugs (and that means hugga-hug-hugs!),
reggieluv

 

Tue, 10/20/2015 - 17:35 | 6691353 DaddyO
DaddyO's picture

There is no one and I mean no one who does chart porn better to make his point than Tyler Durden...

DaddyO

Tue, 10/20/2015 - 17:24 | 6691290 wizteknet
wizteknet's picture

I shit u not. HUGS all around!

Tue, 10/20/2015 - 16:10 | 6690944 Osmium
Osmium's picture

“`You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?”

Clinton raged at aides, according to journalist Bob Woodward’s book, “The Agenda.”

Tue, 10/20/2015 - 17:14 | 6691241 knukles
knukles's picture

Yep.

Tue, 10/20/2015 - 16:11 | 6690947 Arthur Schopenhauer
Arthur Schopenhauer's picture
The 4 week Treasury auction was conducted today and drew the lowest bidder participation since January 2005, but the 4 week Treasury bill High Yield was the highest since February 2014. Why?
Tue, 10/20/2015 - 16:20 | 6690992 NoDebt
NoDebt's picture

If you're buying a T-bill that matures in, say, 60 days, a delay in the government paying you back until, say, day 75 (due to a failure to raise the debt ceiling in time) makes a BIG difference in the effective yield of that very short term security to you, the buyer.

So buyers either stay away from the whole situation (don't buy short term government paper) or at least demand a higher yield for the possibility of having to accept delayed payment.

It is NOT a fear of default.  It is a fear of delayed repayment.

Tue, 10/20/2015 - 16:47 | 6691110 Mentaliusanything
Mentaliusanything's picture

Who would down vote that sensible explanation... this place is getting weirdo like

Tue, 10/20/2015 - 16:59 | 6691161 NoDebt
NoDebt's picture

My down-voters are my most loyal readers.

Tue, 10/20/2015 - 19:17 | 6691742 Inzidious
Inzidious's picture

Lol. That was actually pretty funny

Tue, 10/20/2015 - 23:54 | 6692849 Motasaurus
Motasaurus's picture

I almost downvoted him out of spite.

Tue, 10/20/2015 - 17:15 | 6691237 knukles
knukles's picture

Any delay in payment actually constitutes an event of default.  Can be dressed up in all sorts of lingerie, heels and associated sexy trappings, legal mongerings and political musings, but default is when "funds are not received upon contractual due date".  Period. 
And yes, NYC's "moratorium" was an event of default.  Everybody just pretended that it was "something else"

Now, I believe what you're saying is that unlike the "textbook" default where it's a long time, no see 'em, extended period of negotiation followed by partial payment, the delay on the bills will be an effective total return nuisance.  A lowering of effective returns due to the time value of money.  Agreed that!  ((And BTW, is less important at 0.0001% than 10.01%. (duh, Knukies, my dog can figure that out) but nonetheless, real))
Now, my own personal bet would be (if I had any money to do so with) to be buying some of those bills getting hammered, because I don't believe that they'll miss a payment.

Missing a payment or not refilling EBT cards when expected is essentially a precursor that the Cabal Raping and Pillaging the Country cannot continue.

Also, there is no provision in the US code for cross-defaults.  Meaning that if a bill (or bond or note) maturity or coupon payment is missed, then those not yet missed are not technically/legally in default.
Makes for odd bed fellows, no?

As a loyal reader of yours, I do not own vote you, because you're the Man!  And we might need to share the bunk some day.  You don't snore, do you?

Tue, 10/20/2015 - 17:27 | 6691304 Arthur Schopenhauer
Arthur Schopenhauer's picture

Perhaps it could also be thought of as fear of getting the cooties.

Tue, 10/20/2015 - 17:30 | 6691310 wizteknet
wizteknet's picture

Delayed good luck on that one. Latest joke today. About to bankrupt it all... cooties & all...

Tue, 10/20/2015 - 22:25 | 6692553 acetinker
acetinker's picture

Same thing.  Late payment is default.  It's just that the creditor dare not call the debtor out, in hopes that s/he will eventually pay...

And s/he (down the line) will eventually pay...

And s/he (further down the line) will eventually pay...

And s/he (even further down the line) will eventually pay...

Sooner or later nobody can pay.

P<P+I

That's all you really need to know.

Tue, 10/20/2015 - 16:12 | 6690957 freewolf7
freewolf7's picture

If they can make the markets go up, and let the markets go down, they can make the market look flat. Nothing to see here, is there a game on tonight?

Tue, 10/20/2015 - 16:13 | 6690963 ghostzapper
ghostzapper's picture

Hitlary aptly contributes the following: "T-Bill or FRN, What Difference Does it Make?"

Tue, 10/20/2015 - 16:13 | 6690964 NoDebt
NoDebt's picture

T-bill yields spiking is not an indication of fear of default.  It's fear of delayed payment.  If you think you're getting your money back in 30 days but it actually takes 60, you're getting a lower effective interest rate on your money.  So buyers demand a higher yield just in case a 30 day T-bill ends up being a 45 day T-bill.

Tue, 10/20/2015 - 16:28 | 6691035 wizteknet
wizteknet's picture

Man go to work today & missed out! -13 so funny

Tue, 10/20/2015 - 16:28 | 6691040 Keltner Channel Surf
Keltner Channel Surf's picture

“Just What I Needed”     by The Cars

I don't mind you stopping here and wastin' all my time
But when my profit target’s oh so near, I kinda lose my mind
It's not the pin-bars that you wear, or lunchtime gaps to start a scare
And I don't mind you sine wavin’ and refusing to climb

I don't mind you dipping low and taking out the creeps
My break-even’s so far below, I won’t lose any sleep, no
But, you don’t play your fake-outs well   
You’re coded by Citi? -- I can tell
And I don't mind you swoopin’ down, then taking a big leap

I guess you're just what I needed, I need someone to weed
To flush out the weak hands, so I can succeed

I don't mind you selling hard for 14:17
Then ramping in the final seconds
to close that big bar green
It's not the sawtooth wave you wear
Big volume spikes?   I don’t care
But, could you use a bit more speed
before my Keltner top recedes?

I guess you're just what I needed, I need someone to feed
To feed off weak players, I needed someone to bleed
Yeah, yeah, so bleed ‘em

Tue, 10/20/2015 - 16:33 | 6691054 nakki
nakki's picture

FB, Google and Amzn have a combined market cap of almost 1 trillion dollars. Think about that for a second. 35 years ago the entire market cap of all US stocks was 1 trillion dollars. Today its close to 22 trillion. 

I don't think wages have kept up. In 1980 the total US debt was around a trillion dollars today well who real knows (19 trillion?), and I'm not talking about future obligations (200 trillion) that will never be honored. It looks like the wealth transfer has been completly funded by US debt. Oh to own the printing press.

Tue, 10/20/2015 - 16:50 | 6691126 Mentaliusanything
Mentaliusanything's picture

Thank you Mr Nixon for printing us to prosperity

Tue, 10/20/2015 - 16:51 | 6691128 kahunabear
kahunabear's picture

Crude carnage? XLE was up. Hyperbole alert.

Tue, 10/20/2015 - 16:56 | 6691144 Keltner Channel Surf
Keltner Channel Surf's picture

Very tired, annoying day sessions for the 3rd week running, Daily charts show COMP and SPY perhaps peaking at 200 and 100 DMAs, respectively, while IWM was again unable to hit its Keltner, something that wouldn't have been an issue in 2013-14.  Slight stochastic rollover may suggest to some a short opportunity, but in reality markets are mirroring the "central bank anticipation" pattern we've seen for years, with Draghi this week and the FOMC and BOJ next week, we're unlikely to see a decisive move down until the wizards of Oz speak, or their intentions are leaked. 

It seems that until the dog is severely punished for eating all the Pringles, he'll keep on doing it, sans volume ...

Tue, 10/20/2015 - 16:59 | 6691158 Global Douche
Global Douche's picture

funn-der-mentals? How about Thunder-Metals! Ag & Au to shine in the months to come. The LBMA wants more "transparency" like Obama promised "transparency" too, and likely for the same internal reasons! Money, Power, and of course CONTROL which leadeth to both. I smell a rotten rat across the Big Pond in that one.

Tue, 10/20/2015 - 17:36 | 6691356 arrowrod
arrowrod's picture

Everybody relax.

The HFT will keep the party going forever.  Think about the poor programmers.  Squeezing another microsecond advantage over the other HFT computers in the same room with their competitors in the various stock exchange computer centers.

I wonder how the HFT guys "reward" their congress critters?  Oh, it just occured to me:  The Hillary gambit.  Backdate a stock "deal".

 

Tue, 10/20/2015 - 17:51 | 6691418 nmewn
nmewn's picture

I love seeing "healthcare" stawks selling off, it smells like victory ;-)

Tue, 10/20/2015 - 18:20 | 6691511 mijev
mijev's picture

Can't believe that Harley Davidson stole Oprah's ticker.

Tue, 10/20/2015 - 20:18 | 6691925 polo007
polo007's picture

The Federal Reserve Bank of San Francisco published a working paper this month, "Measuring the Natural Rate of Interest Redux," in which it introduced the potential for using both negative short-end rates coupled with another round of quantitative easing (QE) focused at the long end, as a response to the next recession.

http://www.frbsf.org/economic-research/files/wp2015-16.pdf

Thomas Laubach

Board of Governors of the Federal Reserve System

and

John C. Williams

Federal Reserve Bank of San Francisco

October 14, 2015

Abstract

Persistently low real interest rates have prompted the question whether low interest rates are here to stay. This essay assesses the empirical evidence regarding the natural rate of interest in the United States using the Laubach-Williams model. Since the start of the Great Recession, the estimated natural rate of interest fell sharply and shows no sign of recovering. These results are robust to alternative model specifications. If the natural rate remains low, future episodes of hitting the zero lower bound are likely to be frequent and long-lasting. In addition, uncertainty about the natural rate argues for policy approaches that are more robust to mismeasurement of natural rates.

Tue, 10/20/2015 - 22:43 | 6692634 rupertDel
rupertDel's picture

Wondering when the first ETF defaults happen?  where etf positions are frozen because the backing companies can't pay all the sellers that want out.  Just a matter of time?

 

Tue, 10/20/2015 - 22:53 | 6692665 FreedomGuy
FreedomGuy's picture

So, as a non-trader someone tell me what the summary message of all these charts is?

Wed, 10/21/2015 - 01:05 | 6693001 kaboomnomic
kaboomnomic's picture

Here, from other site:

http://wolfstreet.com/2015/10/19/saudi-us-oil-inventories-hit-record-hig...

 

Whatever Saudi's oil minister said? The FACT IS, nobody wants Saudi's over-supplies oils!!

 

Those US idiots shale? hedge their positions. However? The longest hedge contracts, expires in 2016 (2 years hedge contract from 2014).

http://www.carbontracker.org/in-the-media/u-s-shale-oil-and-gas-going-ov...

 

You still think oil carnages would end SOON?

 

- - -

 

Remainds you,

https://www.rt.com/business/318527-rosneft-sechin-oil-shale-us/

 

QUOTE:

"The struggle for market share is one of the factors affecting oil prices. This is reflected in the budget revenues,” Sechin added.

"He also said that production costs for Russian oil companies are the lowest in the world - $4 per barrel. At Rosneft the figure is even lower - $2.80, which is the best in the world, according to Sechin."

 

US & Saudi's wants OIL WARS with Russia??

 

- - -

 

Didn't I said before oil goes down AT LEAST 26$??

Well.. what you see is precursor to go to it..

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