The Nasdaq plunged by the most in over 8 months today and broke all the way back to unchanged from the December taper decision of the Fed. All major US equity indices are now negative from the time the Fed decided to slow its flow of free money. The Dow closed below its 200DMA for the first time since December 2012. The S&P 500 closed the furthest below its 100DMA since QE3 started. USDJPY was in charge and everything was higher or lower beta off of that as it broke 102 early then 101 later in the day (with the Nikkei -700 points from the day's highs). Treasuries rallied around 5bps to fresh 7-month low yields for 30Y. Gold and Silver surged, adding 1% on the day as the USD lost 0.25% on the day (led by the 1% strength in the JPY). VIX smashed to 14 month highs over 21%. Credit deteriorated but stocks are catching down.
Just 8 hours into her reign, QEeen Janet has some work to do...
"Not off the lows"
The coming storm... DOW down 300+ points...worst February start since 1982...Nasdaq down 2.3%...worst monthly start since 1972... #Selloff [10]
— Brian Mahoney (@btmahoney) February 3, 2014 [11]
Summing up the JPY carry trade unwind... (h/t @StalingradandPoor)
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This is the worst start to a month since 1982 for the Dow and S&P and the worst since records started on the Nasdaq.
The Dow Industrials slammed back under the 200DMA - lowest in over 3 months; down 3% since the taper and down over 7% in 2014
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The Nasdaq is down 2.6% - its biggest drop in 8 months - its worst start to a month on record; testing the 100DMA and unchanged to Taper
The S&P dropped 2.2% - its biggest drop since June; lowest in over 3 months and well below its 100DMA - furthest below its 100DMA sicne Nov 2012.
Since the taper, major indices are all negative now...
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And since the new year, they are in trouble...
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USDJPY was in charge...
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VIX has risen 64% on the last 2 weeks - its fastest rise since the US debt downgrade debacle in summer 2011...and the highest close since December 2012
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It seems, once again, that credit investors smelled something long before the exuberant marginal stock buyer...
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The USD weakened led by JPY and EUR strength...
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Treasuries were well bid all day after the weak ISM data... 2s10s pushed to 228bps - its lowest in over 3 months
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What is perhaps more worrisome is the surge in bill-yields around the debt-ceiling...
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And commodities were very mixed with growthy oil and copper down and safe haven gold and silver up...
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Charts: Bloomberg
Bonus Chart: The Nikkei is down 2300 points year to date (from 16,450 to 14,160) and the Dow is down over 1200 points year-to-date (from 16,540 at the close of 2013 to 15,316 lows today)
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Bonus Bonus Chart: HerbaLOL...
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Bonus Bonus Bonus Chart: FX Carry implies a major unwind of the spec VIX Futures short positions...
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