Art Cashin On Bernanke Quoting Shakespeare In Swahili, And Everything Else In Yesterday's Surreal Trading Day

Tyler Durden's picture

To some, yesterday's ridiculous 400 point move in the DJIA in just over 30 minutes on nothing but yet another denied FT rumor, is still mindboggling. Make that to most. Although making things far easier would be to finally accept that the market is completely broken. It is. But in the meantime, here is one way of enjoying it, courtesy of the perspective of the Fermentation Chairman who summarizes all that happened though his veteran eyes.

From Art Cashin of UBS

Fed Teases, Short Squeezes, A Three Hour “Bear Market” And A Zombie Bank In The ICU Produce That Whacky Session 

In Tuesday’s Comments, the summary of the Consensus call was “Has potential to be a whacky session”. Well, it sure lived up to that potential.

The day started out with a gap down, as the unwrapping of the Dexia Bank situation (which we had noted for two days) revealed some extensive and apparently unsuspected problems. That the bank had passed the regulatory stress tests with flying colors only a few months ago, raised real new doubts about the stress tests and the entire European banking system.

U.S. markets then watched markets and events in Europe to see if any nuance might suggest the next move.

They also kept an eye on the Bernanke testimony. It had an almost plaintive tone to it.

Mr. B said the economic rebound, that he and the Fed had carefully nurtured through QE1 and QEII, was at risk of “faltering”. That was as close to a Fed chairman saying “double dip” as we are likely to come to hear.

As a sidebar, we would like to note a rare, perhaps unique, event at the hearing. One of our elected officials asked an intelligent question of the Chairman. He asked if the balance of Operation Twist would be measured in par value or market value. Bernanke responded - “par value”. The rest of the panel looked at each other as if someone had just quoted Shakespeare in Swahili. The same flummoxed looked appeared on the faces of some the “fed experts” covering the hearings on TV. It was a precious moment and I’m sorry I didn’t tape it.

Markets reacted only slightly since the main focus of the day remained in Europe.

A third factor in the drama was the internal technicals of the market itself. As we had also noted in the Comments, the market was badly oversold after back to back 90% down days. They, in turn, had brought us down to some critical support levels.

Those support levels were broken by the gap down opening, resulting in some trapdoor style selling in the first hour. The early break of the support levels brought some interesting exchanges among the trading section of the Friends of Fermentation. Several noted that if a sharp break of important support doesn’t bring on a bout of full, all out, capitulation selling, the bears (shorts) may find themselves too far off base. In some past years, the resultant attempt to reduce risk (cover some shorts) started a panic among other shorts. When those observations were exchanged around the opening, no on realized how prophetic they would be by the closing bell.

With the Bernanke hearing ended and Europe starting to close, stocks began to tip-toe higher in a rather timid attempt to see if the former support had now converted to resistance.

Sure enough the rebound began to sputter as the Dow reached the region of 10,600 and the S&P around 1098/1103. Seemingly capped by the new resistance, stocks began to drift lower in what looked to be a ritual move to retest the morning lows. Then as the final hour neared, news began to filter out of Europe.

First was news on Dexia Bank. This formerly good bank (stress tests) would put a large chunk of its assets into a “bad bank”, a zombie-like organization whose primary function was to hold toxic assets in a financially lead-lined vault, unmarked to the markets.

The importance of the splitting of Dexia was not about the structure but the sense of urgency. Hey! Maybe they finally “get it”. Maybe they realize that action is needed and needed now.

Stocks began to rally and then the other shoe dropped. Shoe? Hell it was like a “Seven League Boot”.

The FT carried a story that European leaders were working on a plan to “re-organize” many of the European banks. The story was instantly and simultaneously leaked to a variety of media outlets. The sense that “they finally get it” went from a whisper to a roar in a nano-second. (Forget that Christine Lagarde had suggested this at Jackson Hole.)

Electronic buy programs exploded onto the floor. A rush of short covering then joined the stampede. (That assumption is based on the leading role in the rally played by the heavily shorted stocks - Bank America; Morgan Stanley; SocGen; et. al.)

The pressure on the shorts was unrelenting and the buying never even paused for breath. They closed right on the high tick and in heavier volume. The bears, who had looked so smug at 10:00, limped off to the showers with bruised faces and much lighter wallets.

And today's Trivia:

Today's Question - I'll meet you half-way. Generous Gene comes back from the potato patch with a sack of potatoes. To the first friend he meets he gives half the sack plus half a potato. To the next friend he gives half of what he has left plus one half a potato. To the third friend he gives half of what's left plus one half a potato. Now the sack is empty. How many potatoes
were originally in the sack?

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pupton's picture

Bank of America down again today...old news or is this a big deal?

MillionDollarBonus_'s picture

Art Cashin fails to realise that politicians have no bussiness meddling with monetary policy in the first place. I would expect a seasoned investor like Art Cashin to at least know that our Federal Reserve is set up to pursue its dual mandate INDEPENDENT of congress, to avoid corruption. Politicians are elected to be strong leaders who know how to inspire trust and confidence in the economic recovery, and to make tough decisions regarding FISCAL policy, not monetary policy.

narapoiddyslexia's picture

MDB's sarcasm is almost ethereal.

pupton's picture

 "politicians have no bussiness meddling with monetary policy in the first place" But the federal reserve does?  Sounds a little mixed up in the logic there.  How about we have SOUND MONEY that nobody can manipulate?

(Ron Paul 2012 - duh)

Jack Napier's picture

Dr. Paul is a great candidate if you like the following:
- He wants to sell all the gold in Ft. Knox
- His wife and daughters are in the Order of the Eastern Star, the masonic order, a secret society, not unlike the bonesmen we've had in recent history.
- He adheres to the Jesuit controlled John Birch Society

Moral of the story = controlled opposition. Don't count on this guy. Of course these things likely ensure he will win since people are begging for the next installment of change we can believe in.

baby_BLYTHE's picture

he only floated that idea because the Treasury refuses to open the pearly gates at Fort Knox to American citizens. He wants confirmation that the gold is still there.

Also, Paul's father was a mason. Paul has confirmed this on numerous occasions. Paul himself has only spoken to the Birch Society, he himself is not a member.

Oh regional Indian's picture

Spot on Jack. Controlled opposition indeed.

30 years of talking is a looooooong wind, hmmmmm?

The confirmation bias is showing in your red/green count, as mine will too I suppose. 



i-dog's picture

Not only was Ron Paul associated with the Jesuit funded and controlled John Birch Society, but he is also closely associated with prominent members of the Jesuit funded and controlled Council for National Policy (the successor to the JBS and highly secretive right wing NWO sibling of the left wing Council on Foreign Relations). The Council for National Policy also backed Rand Paul's Senate campaign. The highly secretive CNP makes the Bilderbergers look like paparazzi whores when it comes to publicity and denials by alternative media personalities who are otherwise all over NWO organs.

Ron Paul doesn't smell right to me...........

OT, but also related: Romney is also a Jesuit puppet (Mormon) and is currently running at 59% for Republicrat presidential nominee on

snowball777's picture

I know it's hard coming up with new material. Sometimes you just need to take a break.

Take a break.


Woodyg's picture

A thursday night ass-kicking is coming your way Cal Bear.

Cynical Sidney's picture

of all things you should expect a bearded economist like shalom bernanke to at least know that his federal reserve is set up to purse its dual mandate independent of banksters to avoid corruption. but expectations are often quite distant from reality

Last_2_Sense's picture

The Federal Reserve separate from the banks? You are joking right? The primary dealer "Investment" banks like Gold-inmy-sacks are the counter parties to the Fed in the whole money creation scam. Thats why they will never be allowed to fail, they are central to the "we are gonna steal everything" plan. 

X.inf.capt's picture

not much satire in this one....


Schmuck Raker's picture

None, nor sarcasm. Sneaky huh?

Bastiat's picture

. . . politicians have no bussiness meddling with monetary policy in the first place


Politicians had no business creating the Federal Reserve Bank.

i-dog's picture

"Politicians are elected to be strong leaders "

Hogwash! ... politicians are elected for their hairdos and/or toothy smiles.

Strong leaders scare the sheep (and are also a threat to the puppet masters).

spankfish's picture

"Hogwash! ... politicians are elected for their hairdos and/or toothy smiles."  Have you ever seen Barbara Mikulski, the U.S. Senator for Maryland?  Sir, you stand corrected!

ZeroAffect's picture

A classic 'drinkin-the-Kool-Aide' comment by $$$,$$$,$$$ Bonus.

"Politicians are elected to be strong leaders who know how to inspire trust and confidence in the economic recovery, and to make tough decisions regarding FISCAL policy, not monetary policy."

Sure, they may be elected by the sheeple to do what you claim they aspire to do, but we all know they don't do it. Just look at all the 'rosy' economic data we've seen over the last 2 years. Yeah, my confidence level in our elected politicos is Sky-High.


Smiddywesson's picture

Politicians are elected to be strong leaders who know how to inspire trust and confidence in the economic recovery, and to make tough decisions regarding FISCAL policy, not monetary policy.

Silly boy, politicians are selected, not elected, by TPTB to protect the status quo which feeds upon the electorate.  They are selected on each side of the aisle, and on each side of the major issues, so that TPTB always have a useful pawn to push forward in whatever party the sheeple are in a mood to support.

prains's picture


is that to mean; to bus or on the bus you have achieved "bussiness" ??? 

would the verbage fit into something like; "on his way to the chinese gulag Bing Bong Pow met his tragic end by way of an unintended "bussiness"?? 

MDB_your chinese troll skirt is showing

Sambo's picture

BAC website down 6th day in a row......:(

Cynical Sidney's picture

market rallies on any news of possible bailouts on the backs of the general public

from LA Times:

In two hours before Congress' Joint Economic Committee, Bernanke painted a gloomy picture of the economic recovery, describing it as "close to faltering." He predicted there would be no quick pickup in new jobs and again urged lawmakers to come up with a credible plan to deal with federal deficits.

His frustrations emerged more sharply and vividly than in the past. He empathized with anti-Wall Street protesters who, in marches in New York, Los Angeles, Chicago and elsewhere, have been blaming big financial institutions, including the Fed, for the economy's woes.

"Very generally, I think people are quite unhappy with the state of the economy and what's happening," he said. "They blame, with some justification, the problems in the financial sector for getting us into this mess and they're dissatisfied with the policy response here in Washington.


We blame you, douchben

zorba THE GREEK's picture

7 taters

Who wants to participate in this kind of broken market, I know I don't.

defn8Dog's picture

But isn't it Great to see follow-thru today?! Example:  FCX (up)  no longer correlated with the price of copper (down).  Risk on, beetches!

catacl1sm's picture

But Cramer said FCX is in great shape!?

oogs66's picture

sadly, if the market is a reflection of anything, how broken is our economy?

LRC Fan's picture

Would you rather participate in a market with 100% transparent and widely available information?  How would you ever make money if the markets were 100% efficient? 

Smiddywesson's picture

Would you rather participate in a market with 100% transparent and widely available information?  How would you ever make money if the markets were 100% efficient? 

Yes, and that's why you will never, ever, see "fair" and 100% efficient markets.  There's just no profit in a level playing field. 

I would go a step further and say there never were fair markets.  Even in colonial times on Wall Street the big players must have realized they could join together and quietly wait on the sidelines for the little traders to cluster on one side of the trade, and then trade in size to run their stops.  A tip of the hat or a pinch of snuff gives the signal, and all the little players who were stupid enough to trade with each other are swept away. 

That is exactly the same game being played today.  If you cluster on the side of a trade with enough retail to justify the costs of moving the price, you invite attack, especially if there is some fundamental story to keep you in your position.   Yesterday was the penultimate example of them moving Heaven and Earth to squeeze those who made themselves squeezable.  

Hugh_Jorgan's picture

I think this is a trick. Assuming he is not allowing you to complete the process with the 3rd friend getting 1/2 of zero (in that case there would have been 5 potatoes in the sack).

There's no way to get 0 in the bag as long as every friend gets HALF of something left above and beyond the 1/2 of a potato. In other words, there is no way to end up with a completely empty bag in this scenario.



GeneMarchbanks's picture

Yes whacky session to say the least. Here's some trivia right back at you: Art, what's Swahili for Plunge Protection Team?

The Axe's picture

You the man ART!!!!

reader2010's picture

Black swans are needed and where can we find them?

the misanthrope's picture


wapige timu ya ulinzi



Ned Zeppelin's picture

"Wani por cowbisa. Cowbisa por Kong!"

- King Kong, 1933

X.inf.capt's picture

was yesterday a rally, spasm or death throw?


TradingJoe's picture

desperate times call for desperate measures!

X.inf.capt's picture


it is getting desperate...

how do you hold a house of cards together....

Dr. Richard Head's picture

Apparently by playing a good old-fashoined game of Pick Up Stix.  That's all I see these economist drones and politicians doing. 

I think KerPlunk is a more appropriate game analogy right now overall.

X.inf.capt's picture



disabledvet's picture

Classic short squeeze as covered by ZH both perfectly and with perfect insanity. The fact is the dollar is still massively under valued and Congress wants to destroy it's value even more. This is also known as the "free money for Wall Street Act" and ZH has stood opposed to this reality for far too long. Anywho stay tuned because what effect NOT happening in Europe (with the opposite always being claimed of course) is probably the biggest event in economics since the Normandy Landings.