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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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It is the fascist/communist thinking like this that brought us to where we find ourselves today. Save yourself, Robo, and drop the conformist bent so you don't end up with a bulleseye on your forehead when TSHTF!
Hey at least give the guy credit for showing up.
Quick... The RoboTraitor will explain it! He'll know what to do!!
I respect that. If I could hunt for my meat where I live I would do that. People eating meat from McDonalds or supermarkets are eating meat that most likely came from a suffering and boxed in animal. Hunting deer usually saves them the pain of dying of old age, as long as the properly aged deers are killed, and as long as the hunter is a good shot.
I don't get hunters who just hunt for sport w/o eating their kill. Sickening.
Need to drag out the printing presses...and wake up the "Everything is Fine" Spinmeisters...
Guess our rich, monied elites don't know what they're doing again...
In for a dime in for a dollar; that's their problem.
If currency devaluation is a function of unfunded liabilities...
We are way beyond Buffett and well on our way to seeing the hand of Mr Soros.
In for a fpenny, in for a fpound Sterling. Was the funny writing fp or pf?
Ben Bernanke go ahead and start printing. Gas at $10 /gallon or more won't be too good for the economy. More than one way to kill the economy. Too much debt and promises.
gremany to start printing, no other option, either print or kill the euro and bring back the mark
Just a flesh wound. Come back and I'll bite your legs off.
If BoJ was smart they would spike the buying in USD in the Asia session. Intervention works better if you have a direction. The Japs. are content with mediocrity though.
If MoF was smart they would move all those F/X reserves into a contingent ( eur- usd buyback) program. Isn't that a hedge?
11/11/11 cometh ... tinned food bitchez!
The head of Germany's Bundesbank says the European Central Bank must not print euros to rescue heavily indebted governments from the eurozone crisis.
Jens Weidmann, who sits on the ECB's rate council, says creating new money to prop up government finances "undermines the incentives for sound public finances."
this was yestready, now what he will say tomorrow ?
Is the Jenga tower wobbling?
And for some of the biggest rumor-milling all year. Wondering why 'Ark of the Covenant' is so high in google search volume? Apparently Greece has found it and Alexander the Great's grave.
So basically the news story that will pump the markets tomorrow is that Greece is in heated negotiations with Rick Harrison from Pawns Stars to sell the Ark of the Convenant for enough to pay down their debt and Italy's debt.
BULLISH!
http://www.focus-fen.net/index.php?id=n263980
Let the dominos fall. Don't bail anyone out. Let the bankers take the losses. Our pathological political and economic system of corporate capitalism and its predatory investment bankers cannot be transformed otherwise. Why save an inherently evil system that systematically robs the poor and middle class and protects and rewards the Sheriff of Nottingham and King John? As was expressed in I, Claudius, let the evils that lurk in the mud hatch out. Until Goldman Sachs and all others of similar ilk are dead and buried, we live in shame at what we permit.
RALLY!!!
it would appear the grand game of global kick the can is coming to a very ugly and inglorious finale. I guess the question now is does there exist a rumor, a big enough lie left to be told to keep the ponzi going for one last round? Or have we finally run the limit on dead cat bounces and vapor raises?
my biggest concern now is a distraction, a false flag of some sort, but unfortunately it would have to be on a very large scale to make an impact at this point, so we may be looking at something in Europe or the US on a 9/11 scale or even larger...or maybe this was the plan all along, crash the whole thing, then create a new order out of the resulting chaos... who knows? either way we are witnessing history in the making and a very dark and uncertain road lies ahead.
hedge accordingly...
- Like somebody said "it's not a can anymore - it's a boulder.
For those who haven't noticed, the CME is stating that $80 million worth of COMEX REGISTERED gold and silver are unavailable for delivery due to the MF Global bankruptcy.
Did Corzine use $80 million worth of clients gold & silver warehouse receipts as collateral for a short term $400 Million loan?
Tyler, don't let up Zerohedge's pressure on the MF Global theft of $700 million in client funds. The only way ANYONE at MF goes to prison over this is if the MSM reaches critical mass and the public becomes outraged. Zerohedge can push this story to critical mass. Don't let up!
11-11-11 is the big day when everything will crash
Hey Tyler you've got a "NLRT ALERT," whatever that is.
I'm so curious ... what is that?
Research alert on Bloomberg - Use NLRT to set up news filters to alert you when a news story hits the wire that matches your criteria. When a story hits the wire that matches an active alert, you receive a Bloomberg message with the attached story.Instructions: enter NLRT , enter Add New Alert, define an Alert Title.
Thanks. I can haz bloomberg?
Research alert on Bloomberg - Use NLRT to set up news filters to alert you when a news story hits the wire that matches your criteria. When a story hits the wire that matches an active alert, you receive a Bloomberg message with the attached story.Instructions: enter NLRT , enter Add New Alert, define an Alert Title.
Italy’s problem is combined with socialism, not just with debt, as is much of Europe’s.
If your economic model is socialism and your political parties include the Communists and the Socialists, and you work hard to form a coalition government in your parliament, then you have a problem before you start.
Then, when you combine that model with corrupt politicians and officials who lie about the debt and the recovery and then offer the unions even bigger cost of living wages and issue even more money to keep all government employees happy in order to form that coalition, economic hard times follow as sure as night follows day. That’s what always happens under socialism. The private sector can’t afford to pay for the public waste.
So guess what happens next?
Goldman Sachs arrives to assure the politicians that everything can be fixed with more debt and financial manipulation, that all the officials can stay in office, that all the union workers can be paid, and all socialist programs and corruption can continue unabated – and here’s the money. Then GS slices the debt into tranche trash and sells the debt to someone else, and instead of the economy just getting better and better, it all just gets worse and worse. In short, the politicians are lying, the bankers are lying, the press is lying and Europe is fast becoming one big cesspool.
It has been pointed out that the only way out is if the ECB prints excessive amounts of money. But even that exit leads to a dead end; Italy et al. are too big to bail. And it’s a given in this debt-driven economic blizzard where poverty is being perpetuated amidst abundance that the situation is much worse than admitted.
Everyone it seems was surprised except the economy and the perpetrators. The good news is, not even the nimble Goldman escapes this one.
Who in the world could junk this post? Its not a retorical question. Please respond with what this guy got wrong. I dont think he is saying GS is going under, he is just saying they are going to feel some of the pain too. No sarc, I can not afford cable, so I use zerohedge to learn about economics. Junks on well argued positions with out responses creeps me out. Like the junkers have a Deus Ex Machine. And we are all wasting our time.
Thank God I can safely place my money in the US dollar.....WOOOOWWWWW
I keep a folder full of F/X news and General financial news. It was hard to file this one. The financial savy of ( Zero Hedge ) posters is fantastic. I have mentioned many posters, and meet new ones every day. Thank you for your input and humor in these trying times.
This " article" , came to mind whilst reading through the hastily placed bookmarks. http://www.bloomberg.com/news/2011-10-25/demark-s-p-500-may-trap-bulls-a...
Is this guy for real? I trade my own game, but this guy was interesting. Thanks for your input.
I was convinced you only relied on your OUIJA Board and fortune cookies ;) .
People think you don't like me.
Actually TD, you got it all wrong on the market drop.
Seems Barry Soetero is dropping the 15 cents tax on X-Mas trees. This tax was designed to promote the sale and use of X-Mas trees.
If I wanted, I couldn't make this shit up. Obviously, traders inferred the gigantic loss of federal money and economic stimulus and took ES lower.
WTF? Please, somebody tell me how a fucking tax on something promotes its sale to the public?
Tools.
http://vegasxau.blogspot.com
It's called "Obamanomics" live it learn it.
It's do as I say also, not as I do now go eat your peas!
Land of the Oligarchs...sea of the Armada...the bonfire of guy fawkes...the race to bottom of the Hannenkahm run...shusssssss.
This was not caused by Italy. This was caused by B O cancelling the Christmas Tree Tax.
"This will unravel everything our forebears have painstakingly built up and repudiate all that they stood for in the past sixty years," one EU diplomat told Reuters."This will redraw the map geopolitically and give rise to new tensions. It could truly be the end of Europe as we know it."
Translation...
It was such a great party for me, why stop? All the dinner parties and events, not to mention the money.
Que the deer!!!
Salad = what my food eats
Picture of cow eating grass with caption below it:
Hey vegans: my food shits on your food.
Ok ! I'm long " JImmy Cramer" , gurneys! ( http://en.wikipedia.org/wiki/Gurney ) That POS has officially gone " Imaculate Retard"!
Clarification. It must suck to be China. 3 trillion worth of ' paper lanterns'...
Yen, thanks for the tour of Dracula’s Castle yesterday; we loved it!
Meanwhile, prospects don’t look so good for the money manipulation scheme biz in China.
“A property developer in the eastern Chinese province of Zhejiang was sentenced to death for swindling more than U’S$867 million from investors in an illegal fund-raising scheme, a newspaper reported on Wednesday…
"The severe punishment was meted out as the authorities step up a crackdown on pyramid schemes and underground banking,’ the Post reported…”
http://www.thesundaily.my/news/202815
And what kind of punishment does the US mete out? Bonuses, hookers, and blow...
The best trade is to do opposite of CNBC! Its worked for me for a long time.
Let the FAZing continue!
Is sexy Becky Quick back yet?
http://fucklloydblankfein.blogspot.com
That's the first time you've completed a sentence without using the word 'cunt'. Oh wait -- just reread it. Never mind.
Good citizens of Metropolis!
I predict China will run to the rescue.
http://fucklloydblankfein.blogspot.com
Bonzai needs to do a " Shrimp-Jimmy Cramer" Parody... Stick that " BALDSICLE" , on a boat near some calving ICE!
The can is getting heavier now ...
... might hurt some feet, and start rolling backwards
http://www.youtube.com/watch?v=A_sY2rjxq6M
'Nuff said
Regardless of what Stark says the ECB is the lender of last resort. The ECB has been buying EU gov bonds like a drunken sailor. And BTW, the last paragraph of the above article says not only that, but that Stark is resigning by the end of the year (it doesn't say why, but it's because he was pressured out because the EU govs want the ECB to be the lender of last resort.)
Given that the Big 5 financial corporations and the Fed are in serious trouble of Italy is allowed to default I think we'll expect change in the rhetoric tomorrow.
Either that or they'll let everything drop before Ben steps out with both QE guns and helicopters blazing and the ECB saying we'll stop every sovereign bond.
Regardless of what Stark says the ECB is the lender of last resort. The ECB has been buying EU gov bonds like a drunken sailor. And BTW, the last paragraph of the above article says not only that, but that Stark is resigning by the end of the year (it doesn't say why, but it's because he was pressured out because the EU govs want the ECB to be the lender of last resort.)
Given that the Big 5 financial corporations and the Fed are in serious trouble of Italy is allowed to default I think we'll expect change in the rhetoric tomorrow.
Either that or they'll let everything drop before Ben steps out with both QE guns and helicopters blazing and the ECB saying we'll stop every sovereign bond.
The international bankers have become the dictators of all economic and social life and it’s not workin’.
The problem for the financiers is that in essence the taxpayers are the lenders of last resort, and their resources are exhausted. This, in the end, may save our freedom.
The economies of the world are suffering under the dominance of finance over industry, the reversal of order. It’s the unholy matrimony of crony finance-capitalism with socialism – resulting in big collectivist governments and monopolies wiping out small industry and commerce and the individual.
Those skilled in manipulating money now dictate world policy and all economic activity. Either there’s a return to the people of their constitutional prerogative over the issue of money, or the control of the monetary system by the international bankers will lead to a return of the Servile State, where everyone becomes a State servant, without independence or initiative.
Charting the financials - DJUSFN ON TOP comp with GS, JPM, MS and SPX
http://bit.ly/qF9FFJ
Kowalski's Fearless Forecast: I believe that Bernanke's Fed and the ECB will attempt to print their problems away, taking care to recapitalize European banks. I look for this coordinated action to take place within weeks. Italy and Greece will be given the choice of accepting socially dangerous budget cuts or leaving the Euro. I believe both will accept the deal. Lets see if their societies hold together as they both enter deep Depressions and their social programs are sliced like a provolone. Soon enough, Portugal & Spain will share Greece's fate.
http://themeanoldinvestor.blogspot.com/2011/11/ciao-italia.html
But I thought that the market always goes up late in the day....where was Tiny Tim and the rest of the Plunge Protection Team???
JUST IN:
GREECE
They - suddenly - don’t want an ex-Banker as PM ?
says ... Talk about a Hard-Core Euro ?
says ... Europe cannot bail out Italy ?
Confusion in Greece as talks drag on
http://www.youtube.com/watch?v=aqtgJomwGDg
6 mins
Gonna be fun tomorrow !
There is a big Down Channel chart pattern being formed at Dow Jones.
That chart mixed with a possible inverse head and shoulder patttern of VIX, sounds very bad to equity markets next days !
See here : http://pracompraroupravender.blogspot.com/2011/11/o-canal-de-baixa-do-dow-jones-e-ocoi-do.html
Report: It All Some Kind Of Sick Joke
PRINCETON, NJ—According to a new report published this week, researchers at Princeton University and the Institute for Advanced Study have definitively concluded that it—all of it—is some kind of sick joke.
The comprehensive study, which carefully analyzed fields as varied as physics, theology, history, economics, sociology, and philosophy, is said to have found overwhelming evidence that it is all just one big sham specifically designed to humiliate us and cause us as much misery as possible.
"The results are clear and irrefutable: Everything from the unfathomable expanses of the universe to our own continuously deteriorating bodies is apparently nothing more than an elaborate and perverse joke that's being perpetrated on us repeatedly and entirely against our will," said Faisal Ahmed, a quantum physicist and lead author of the paper. "Furthermore, research suggests there's not a single goddamned thing we can do about it."
...
http://tiny.cc/jjh7j
I see alot of falling charts/graphs. I'm guessing the econocalypse is near?
Any time I need a good laugh, it's always a tough call between that photo of a dear in the headlights and the silver bears.
Given the largeness of current events, I pose a question to Z H that may have relevance to some of us in the not-so-distant future.
If you owe the bank $100k on your house, and you have $60k in deposits with the same bank, and the bank goes bust, do you then owe ...
1. 0
2. $40k
3. $100k (deposits forfeited)
Where the fuck is that wanker Harry Wanger?
XLF charts posted previously on my blog warned of what's ahead.
http://stockmarket618.wordpress.com