Last August, a 400 point move in the DJIA was the norm. This August, a 50+ point drop in the second coming of the "Balls to the Wall" DJIA was the green light for sheer market panic. While unknown if it is the cause, or effect, of this collapse in volatility, the NYSE just reported that August cash volumes imploded by exactly 50% from last year, one thing is certain: for banks, which no longer make money on net interest margin courtesy of ZNIRP, and $1.6 trillion in inert reserves, the bulk of which are used to buy TSYs, then promptly repo them back to the Fed and use the cash proceeds to buy 200x+ P/E stocks, imploding stock volumes mean only one thing - a collapse in revenues and profits, terminations of entire divisions, collapse in tax revenues for the US Treasury, an increase in deficit, the need for more debt issuance, and a green light for the Fed to monetizing even more supply. And just to avoid the noise from "unseasonal" Y/Y comparisons, in August total ADV dropped by 12.6% from July. ETF volume imploded by two thirds from last year, and 14% from last month. Cue the financial earnings forecast reductions ahead of Q3 results.
From the NYSE [7]:
NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for August 2012. Trading volumes in August 2012 declined year-over-year and month-over-month due to a decrease in volatility compared to August 2011 and the seasonally slower summer period. In August 2011, trading volumes benefited from extreme market volatility in the U.S. and Europe.
Cash Trading
U.S. Cash
- NYSE Euronext U.S. cash products handled ADV in August
2012 decreased 54.6% to 1.4 billion shares compared to August 2011 and
decreased 12.6% from July 2012. Year-to-date, U.S. cash products handled ADV was 1.7 billion shares, down 24.6% from prior year levels. - NYSE Euronext’s Tape A matched market share in August 2012 was
31.6%, down from 36.2% in August 2011 and down from 32.1% in July 2012.
European Cash
- NYSE Euronext European cash products ADV of 1.1 million transactions in August 2012 decreased 50.1% compared to August 2011 and decreased 25.7% compared to July 2012.
- Year-to-date, European cash products ADV of 1.5 million transactions was 10.9% below prior year levels.
Exchange Traded Funds
- NYSE Euronext U.S. matched exchange-traded funds ADV (included in volumes for Tape B and Tape C) of 168 million shares in August 2012 decreased 67.6% compared to August 2011 and decreased 13.9% compared to July 2012.
- Year-to-date, NYSE Euronext U.S. matched exchange-traded funds ADV of 217 million shares was 30.5% below prior year levels.
[8]
For details on derivative volumes see here [7].