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Italy Sparks Market Bloodbath: Financial Stocks Collapse
So much for the US decoupling. Following 5 days of persistent refusals to deal with reality, the real world finally came back with a bang, and while the overall market tumbled the most in two months, it is really financial stocks that took the brunt of today's beating. As the chart below shows, the XLF has literally collapsed with most major banks on the ropes, and the broker dealer index down 6.45% the most since August 10. The reason? Italy of course, and the fear that once the country is forced to write down its debt, the bank failures will proceed in waves: first Italian banks, then French, and then everyone else, especially those that have already been in the market's crosshairs for their exposure. And if today was ugly, tomorrow promises to be an absolute bloodbath with Italy deciding to proceed with the issuance of €5 billion in 1 year Bills into what may well be a bidless market.
Unable to scramble back to VWAP, the buy-the-dippers faced some uncomfortable reality today in equities as we closed near the lows of the day in ES (on heavy volume). Financials dropped over 5.5% with some of the majors (MS, GS, BAC) and Minors (JEF) stumbling very hard. The biggest drop in financials in over two months (and ES also!) was the worst performing sector as equity markets retraced more of that richness relative to credit that has been hanging over this rally's head. Wherever you looked there was pain with Copper smashed lower (along with silver and less so Gold) as the dollar tore higher after EURUSD fell over 330pips from its morning highs.
ES managed a small pull off the lows into the close but remained well south of both VWAP (light blue) and CONTEXT (dark blue) as volume was 30% above average by the close.
A one-day drop in the Financials ETF of over 5.5% is the most since the early August chaos.
And as usual, this is what happens when too much faith in central planning meets reality:
But it will get worse: unless the ECB steps in early and forcefully tomorrow, this is coming:
Away from stocks, credit was even more aggressively sold off (just as we saw in Europe this morning) with HY crushed - which will implicitly drag our expectations of equity market's relative-value down also.
We have been very vocal at the pump-and-dump we suspect has been going on in the HYG ETF and its underlying HY cash market and today saw HYG dramatically underperform at the close. It seems perhaps (once again) that the liquidity hedge prefernce shifted back to HYG (the high yield bond ETF) after HY17 (the suppoosedly liquid credit derivative index) dried up.
And then HYG also cracked lower into the close relative to SPY...
While taking advantage of this disconnection may seem simple, we suspect that HYG was simply the easiest place to set out hedges as we accelerated weaker into the close and every other market dried up. We discussed this at length last week and especially note that we were growing worried about the exuberance in the HYG and the HY bond advance/decline line.
The 'save' in Oil early on (around the report and the EU close) along with the weak auction in 10Y TSYs probabaly supported ES more than otherwise as broad risk assets did not drop quite as dramatically. TSYs closed well off the low yields of the day but were still down for the day quite handily. VIX blew back out as did implied correlation as macro overlays were grabbed at whatever cost for liquidity. Gold remains up 0.8% on the week but gave back some today with Silver just negative on the week now. The
dollar strength and equity weakness combined to drag us back to -3% YTD
in terms of constant USD purchasing power (and -2.27% outright in the
S&P).
Charts: Bloomberg
»
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bombish, I like it Obombish
Mark123,
Religious loonies?
When are you folks gonna realize the Orthodox Jews are a small minority, Israel is a SECULARIST nation.Most give a crap less about religion of any kind.
It takes time to overcome the brainwashing (and deliberately induced fears) of multiple generations.
Oh yea, the religious loonies are backed by the Power mad, money hungry, Lonnies at the the top of the Bank Chain. De-populate all you worthless eaters! That my friend, is the name of the game.
For the first night in a while, I'm leaving the office early with a smile on my face and a spring in my step. Night all.
Enjoy! I hope it lasts - seriously because I'm short too :)
Count me in dudes...Here's hoping this is the big one...
The big one already didn't happen this year.
It was a couple of weeks ago.
Me too. Went all in a 3:58.
Me too, but only short where it counts ;)
Yeah man, I always appreciate you helpful comments and admire the stones to a couple days ago say you would ride your puts to zero before selling into another BS meltup. I hope it lasts too. Fair valuation in a rational market(hell no we don't have this) means we would go lower unless we go for the group monetizitation thing. Nebulous promises of backstopping and planning to plan coupled with rumors really are the only alternative to going lower. Since this has been tried 27 times before it is my vote, but I think systemic consequences of this volatlity and rumor mongering are beginning to be seen with forced selling and margin calls. Could someone in the biz who knows more tell us what you think?
Ouch to the folks who bought when S&P closed above the 200 day yesterday. Better luck next time.
I would recommend a gratutious 'bitchez' statement - Better luck next time BITCHEZ...Gives it that ZH approved effect!
Zero Hedge, where the traders are manly and call each other bitchez!
If they were calling eachother "bitchez", there would be a comma before the word "bitchez", like so:
"Beer, bitchez!"
Without the comma the above statement implies that beer whines incessantly about minutia:
"Beer bitchez"
:)
Lots of female dogs on ZH.
I may be a lesbian, but I'm not female!
Better luck? Screw them all. Hope they chase year end performance to zero :)
The financials are toast, but don't waste your time arguing that with Dick Bove. Just buy FAZ.
You're better off trading single names than the broad market.
A bailout, printing, or a European "agreement" would lift many names,
except for ones that really look like they will fail. Witness Dexia, MF Global over the past few months.
Red Alert! Paging RoboTrader! Your margin desk just had a cow.
Speaking of Robo, check out one of his favorites, GMCR, it is getting "Netflixed" AH.
apx 48 afterhours, despite apx 67 close ... einhorn homerun...
Mooooove over, bitchez.
speaking of Bove.. I think today was good for a 7 but I'll hold on for a 10 hopefully.
QE3 time.
Not quite yet, but soon.
Big Ben's already got CTRL pressed, and his finger is hovering over "P"
LMFAO!!! Priceless
Nymex Crude Future: 95.94
Don't worry. Ben Bernanke can raise unicorns in 15 minutes if he needs to.
1. Ireland - 1,382%
External debt (as % of GDP): 1,382%
Gross external debt: $2.38 trillion
2010 GDP (est): $172.3 billion
External debt per capita: $566,756
We're gonna need a lot more leprechauns.
Leprechauns are hiding in their holes, armed to the teeth, with their preps yelling "PHYZZ BITCHEZ!" at the top of their wee little lungs.
They're hanging around at the end of the rainbow if they're smart.
Where did you get these figures?
Worse than the potato famine!
You are including the debts of the Irish Financial Services Centre.
Not meaningful numbers at all.
Please subtract them and give us real numbers I would be pleased to see how solvent the Green Isle is perhaps they could float us wankers in the U.S. some cash..
Traced back to source (banks) equates to OMG.
Lumped onto lumpen equates to GFY(ourself....revolt).
C'mon Irish. Where's your traditional fire-in-the-blood. You don't need Guinness for this stoush. (Although it wouldn't hurt).
When are those damn aliens going to invade? We could really use it right about now.
Will they have an "End the Fed" bumper sticker on their vehicle?
Why, on Friday, 11/11/11, of course. They're the ones bringing the Bear Cavalry.
To the FAZmobile!
Love it when they bring out the deer.
I agree. It never gets old!
So what does 'Merkozy' do now? I think their "Abbott & Costello - Whose on 3rd" tour has ended...and I bet they have made calls to their buddies in Iceland asking for Financial Advice...
Not worried, bot some cds from JEF as a hedge bitchez.
Red police siren on Drudge, and deer-in-headlights on ZH.... sign of the times.
The HFT need low volume to make $$... This could go south quickly with the HFT on the sidelines waiting for lower volume rumor melt up opportunities...
Or they could get re programmed to trade from short side :)
Cue flase flag event in ......3.....2.....1.....
( )
`--(_ _)--'
Y-Y
/@@\
/ \
`--'.\ ,
| `.__________/)
http://vintage-ads.livejournal.com/2674987.html
and I'll take that bear cavalry thank you
Leave out the Schnapps bottle, and there is the perfect ZH avatar.
On the other hand, leave the bottle in...
who is the artise?
Is that a deer or my wife?
One and the same if your from the south!
if you're drinking rumpleminze does it matter?
Either you're damn good, or have too much time on your hands.
Europe ; http://www.youtube.com/watch?v=FJvUCDP9u0I Enjoy, before the next leg down!
moving up off the lows at close is an indication that the move isn't done yet, or it use to mean that.
if there is another european bond market collapse early tomorrow, we really could get some circuit breaker action tomorrow.
the /es was looking pumped around 1030 to 1300 hours, but the ppt got burned with the sell volume.
does these tired old eyes good to see them get carried out on their shields like that.
WS banks to get margin calls on their leveraged Italian bond holdings???
Banker: We need more money to reduce your margin.
WS: But we have CDS insurance.
Banker: In that case...double the cash requirement.
WS: But is valued at par on our books.
Banker: In that case...triple the cash requirement.
Hey ROBO you fuckin' troll...how did YOU do today? Love that BULL market you keep calling. Douche nozzle. Oh yeah I forgot, markets down, Robo is conspicuosly absent. Now back to our regularly scheduled collapse.
I keep telling the MomoFader thats its all pump and dump now, he wont listen though.
It's been pump & dump since 1913.
You can say that again, cameltoe.
Regularly rescheduled.
Robo can't even muster up a bullish comment about some two-bit retail stock that had a good day? wow it's ugly out there ...
You know times are starting getting fun when the ZH mascot shows up. We really need a spin of the ZH logo that incorporates the deer on a T-shirt or something.
I do love that picture, oh so cute, innocent, curious and shocked. Adorable.
So funny, and tragic. There has to be a word for that.
It's LULZ!
FAZ Bitches!
Dear Friends,Romans and countrymen(person/) of ZH,
Thanks for the great advice.Sold GLD yesterday.Fuc-- GLD.
And if today was ugly, tomorrow promises to be an absolute bloodbath with Italy deciding to proceed with the issuance of €3 billion in 1 year Bills into what may well be a bidless market.
Or the market rallies tomorrow because an unnamed buyer emerges (ahem--Blackrock!) and all goes well. And that's my bet. Buying Italian bonds is no different than buying puts on the world: neither will pay off if the desposts don't figure out a way to kick the can.
On the other hand, Stark just said the ECB isn't the lender of last resort. So then, things will likely have to get much much uglier before the idiots try to kick the moutains down the ravene one last time.
Ah.....what fun.
Financials are a steal at this level right? HAHAHAHAHAHAHA. Robo? Is this a dip we should be a buyin?
DANG and just when all the bulltards had priced in 13,500 by Dec and gone all-in long again yesterday....well Im positive all got out unscathed and 'BTFD' today.
cnbc says we should buy the dip.
They're probably behind this, too.
http://youtu.be/NpXDxBT3evo
None of the CNBC anchors are available for purchase. Guess I should find some different dips to buy.
Sure, but what would you expect from a bunch of DIPshits?
Given the amount of risk, the Dow should be trading in a range of 10,000-11,400. That's being generous/bullish. Anything above that is pure Pollyana and addiction to the "pop", or the rush of a big move. This is when you know you're gambling and not investing. It's best to be safe and reasonable and buy things for what they are actually worth. It's hard to know worth given the Fed's market distortion, but I know 12,000 is not accurate.
Try 3,000. That's where it will be by mid/late 2012.
Like I said, I was being as bullish. Though, 3,000 does seem way too low, especially in an election year. They won't let that happen.
I have 8,500 as a buy point, and 7,100 as fair value (though we will never be allowed to get there). If governments would stop backstopping the market it would correct to those levels.
Need some follow through tomorrow ... this is the new world of "investing", as countries lurch from recession to crisis to political upheaval there is be no more buy and hold. You can wake up ANY day and have circuit breakers triggered for any of a hundred reasons...
What was TODAY'S rumor? About 1:30pm...
Time to realize the Truth, it will take time, but everything changes with time.
When wave comes to the US, it will be Italy X 10, the minimum banking leverage.
The math simply doesn't work in this financial mess. If you want the math to work, Europe is finished. Euro will go to zero. that is way way not here yet.
ALL under control !
What we haven't seen this movie countless times? Benocide will NOT let the stock market go down. He'll sew his foreskin back on and convert to Islam first. 400 pts up tomorrow.
The visual of that is worse than the "circumcision itself" ... Nasty(:
As Apollo Creed, said. I predict Pain! Greek Humor? Anyone?
That was Clubber Lang's prediction!
http://www.youtube.com/watch?v=o4N3gbZAxr8
OMG lolol funny.
yet zh's resident stock picker genius robotard told us financials were going up like scalded dogs yesterday, wherein some of his acolytes chimed in to mock his detractors by assuring us the 'tard was a money making machine, and we were simply jealous.
rich.
Unfortunately, your beloved gold stocks like UXG, TRX, etc. went down even faster than the banks, and are still waffling at or near multi-year lows.
Meanwhile, JPM is still more than a double off the 2009 lows, hasn't been hammered near as hard as many gold stocks.
Especially frightening when gold has rocketed to over $1,600/oz.
as mentioned to you in the past i do not own a single equity. i own bullion.
silver is up 300% in the past few years. gold is up a lot, too.
the board has been over this with you many times. you lose. bullion owners win.
by you own words you are not making money based on the stocks you have told us you own, and do not trade.
+ $1775
I join the lieutenant down there in the physical gold trench. I would rather buy and hold gold then try to speculate against a crooked system.
Europe looks to be lost. Likely we are next. California dream has already turned into a nightmare, with the worst yet to come.
if you own anything but allocated you're just a creditor
if you own anything but allocated you're just a creditor
Same thing if your ALLOCATED bro.Got to have it where you OWN it.
Real shite.
+1 logic, +1oz
Luckily Au stocks are not where Au investors have invested...
... now if they did? Well, you can imagine how that'll look.
Thanks for showing up RT - we always appreciate having someone to beat on...
JPM? That was the best thing about today, down over 7% and change in the AH
I've got five of the best right here for good ol' JD
I had a meeting all day with the board. We've got the reports to show it that this is not just Italy and Greece who sparked the fears in the markets.
In 7 weeks these numbers will come out and the drop in production in Europe is just staggering. Germany, Belgium, France, Holland, everything is down 7 to 9% already and a lot of the production facilities are preparing for a shutdown.
The shitstorm is comming for sure.
Inflation is also expect to skyrocket in the last 6 weeks here in Europe. Predictions are it's going to 4.7 to 5.2% on the index.
Phew!
Good thing I live on the island of Luxembourg!
The last remnants of industry closing their doors these last weeks is just a coincidence, by the way.
Yes! And who is Europe's biggest trading partner?
sri lanka?
Kuala Lumpur...
@ Sudden Debt
Thanks for the boots-on-the-ground report from Europe. Looks like we are now back in a nearly worldwide recession again. Those are BIG production drops. To my knowledge, while slow here in the USA, we have nothing near that kind of a drop here.
Higher inflation is likely to keep pressure on interest rates to go up.
Hey! If the euro goes down enough, my wife and I may be able to afford a trip to Italy after all (assuming it's not in flames).
Wait a minute. CNBC said to buy the dips. So go "all in" tomorrow?
oh, the horror,...
Lol, MW posts SP500 - 29% goes to Europe. And since Europe is about to go BK.......
TRIN closed near HOD at 7.0
Index Put/Call closed at 1.75 for the second day in a row
TICK exploded to 1,527 today, that is 5 days in the last month at -1450 or worse
And the 51st consecutive trading day with a -1000 TICK or worse, another NYSE record.
SPY sold off today on less than 310 million shares, less than half of the 750 million share panic selloff in August.
GMCR getting pole-axed, precisely why I never own any stock in the IBD Top 50 that sticks around too long at the top of the list.
Still have all my longs in place.
and now for some football scores:
35-31
21-17
42-0
17-10
next post: nfl scores.
"still have all my longs in place".
Ohsh, that will hurt! Doesn't it hurt already?
I'm sure they are hedged. Just like Black Rock.
'Still have all my longs in place.'
You're a trooper, that's what makes this doubly enjoyable.
Well good luck Robot. It is just this kind of day (and really bad timing) that keep me from trading.
So, I buy gold. My kid (maybe grandkids in the future!) will get it.
good, you'll need your long underwear
Robo
I think Domino is running that 7.99 pizza deal that should get you through the week!
They deliver so you won't need the bus.
Bernanke has the last word. The final outcome will be the united states of Zinbabwe including Europe, Japan and US. Bernanke will be appointed as the chairman of the ZCB.
So if Europe is falling apart and there was no bail out that will do anything, why don't we give back the entire October rally in one day?
That is a rhetorical question by the way....
Karate Kid (the original one with Ralph M.)
"SWEEP THE LEG.....DO YOU HAVE A PROBLEM WITH THAT???"
GET EM A BODY BAG MAN.....lol
Markets are screaming for bailouts. Massive printing to follow. TBTF in charge.
After getting burned pretty bad in the melt ups over the past month, I bought a small position of Nov 19 FAS $12 puts the last couple days, some at $0.37 and some at $0.23. I got stopped out today at $0.48 per contract, only to watch it continue all the way to $0.70. Almost the best trade of my life, if not for that stop....but I still did OK. A little hesitant to jump back in short right now. My convictions say jump back in short, but my experience getting burned by the rumor-rallies makes me hesitant. I am definitely leaning towards the "stay out of the game" approach going forward. It really is nothing more than a casino, and I think the manipulation has demoralized me to the point that I am scared to follow my instincts, no matter how strong.
You and me both. Who, but the people who "manage" other people's money and the primary dealers, would play this casino anymore?
if only the liquor was free
Plus on you. I was doing great short until the Merzosky 'plan' early in October that resulted in the biggest rumor mill melt up ever - plan that wasn't to meetings that went nowhere to - a fucking month of that shit.
But I'm a stubborn s.o.b., and it appears my (and many other on this list) day cometh.
Today was a good start.
I may double down tomorrow.
The can has reached the end of the road, and meets the deer in the headlight.
Reality rally down - started today.
Can kicking has just begun think of the tools, lies and manipulations still to come you have seen nothing yet..
I hope you are right. With my luck, now that I am finally too spooked to short again......this will be the time the market does actually continue to decline. Unfortunately I wasn't as spooked during the Merzosky 'plan', which cost me. I know what should happen and what the truth is, still I just can't help but think that the minute I jump back in short, is the same minute a new bailout rumor comes out that juices the ES 2-3%.
Then of course, there is the psychological issue of considering buying back the FAS puts for $0.75 / contract that I bought for $0.23 yesterday. Do I believe that after a 300% run today they still have further upside? Yes. Do I have the courage to buy back at $0.75+ in the AM? Probably not.
Anyways.....good luck to you. I hope your stubborness pays off. I wish I would have been stubborn just 24 hours longer than I was.
Alas, I took a 100% plus gain on the weekly VXX 50 calls only to miss out on about a 2000% gain on the day. But I'll be back tomorrow.
Give me a fng break man. Down 389 one day up 400 the next. You know it and I know it. You can put the deer back in the drawer Tyler. The algos will be jerking themselves off by this time tomorrow over some rumor that China is bailing everyone out or G-pap resigned or insert lie xxxxx here to pump the markets.
Yep, that model will work until the day it doesn't.
Yeah well that day won't be tomorrow or any other time that anyone here predicts. It will happen randomly, when you least expect it and at terminal velocity.
the bigger.. the blacker... the better...only massive death to the financial world.... will spark the renewal and rebirth we need...
It may go to 0 but not just yet.
Plenty of time left.
congrats.
LMAO! Good luck with that.
Talk about charging into machine gun crossfire...
Itay's 1 Yr yield is now over 10%...
Got Spam & Ammo?
how did other yields end the day?
wow...10%!!!!!!! And that with ECB gorging on their debt no less!
LOL, no shit, eh?
The ECB now holds half a trillion of utterly worthless paper.
Wait for it...they wonder why no one will invest in the EFSF?!
I am still long on euro-piano wire concessions however ;)
Don't worry, Hildenbrand will ask SNB and cantonal banks to go all-in. /sarc.
Anytime I see Kramer's picture on a banner ad, I instictively click it to generate revenue for ZH. I just have to remember to "open in a new window" so I don't have to back-arrow to ZH.
great idea holmes...will do it myself
The TPTB is not stupid
Everything will get rescued or bailed out soon
And "Risk On" will come back with a vengeance
Including copper and gold
You just went full retard. Never go full retard.
Would you like your new " CUTLERY SET " , copper plated?
"Everything will get rescued or bailed out soon."
I believe you are correct Robot. Wash, rinse, repeat. They will do the cycle as long as they can. Until it doesn't work anymore.
Beware...
imagine that. gold going up because of money printing and bailouts.
robottrader: when you need last year's news.
Burned bad today, rearviewtrader? You watch 100 indicators, live on every tick, and after years you still have no idea what is going on. Oh, and oil is pushing 100, are the LA gas prices 'crashing' as you have claimed for the past year? LOL...
I think once you realize the Powers That Be are not singular, you'll have a much better go at it.
RT, when will the euro disconnect from equities occur?