We’ve landed in the next phase of what arguably started in 2007, but what you could place back many years before that, an economic system based on the fantasy that is debt driven growth, inflated by a factor of a trillion, give or take a few zeros. That system is in the process of dying. And the people who have tried to make you believe, and succeeded, that it would all be fine in the end, are now jockeying for position in the aftermath of the demise of a world built on debt. And they are the same people who built that world, profited from it to an insane degree, and want to use those profits to hang on to power in a world that will be dramatically different from the one they called the shots in. And that doesn’t bode well; it tells us violent clashes will be on the horizon.
Ebola isn`t a new movie release, and CNN isn`t its viral marketing advertising agency.
Just as we warned, liquidity was incomprehensibly low today (below normal pre-market levels during the peak of the trading day) and the intraday whipsaws were meteoric as a closed cash bond market enabled the slightest twitch in USDJPY to send S&P algos into conniptions. Biotech crashed. Trannies were ripped ridiculously higher at the open - then collapsed into correction (-11% from highs); US Airlines have fallen for 6 straight days, crashing 17% (with today's 7% plunge - driven by chatter over airborne Ebola - its biggest in over years). Tresury futures implied a notable drop in yields across the curve (10Y -7bps at 2.21%, 30Y 2.97%, and 5Y 1.45%). The USdollar closed -0.33% led by EUR and JPY strength (but AUD surged 1% extending gains after China data). Gold ($1234), Silver, and copper all gained on the day as WTI fell once again (despite some intraday strength in the middle of the day). Stocks "flash-crashed" on very heavy volume in the last 30 mins with VIX breaking above 24 (highest in 16 months). All major equity indices are now below their 200DMA with the worst 3-day loss since late 2011.
One of the reasons why the market sold off rapidly in the last hour or so, has been news out of Boston that an Emirates flights has been quarantined at Logan Airport, where as Fox Boston reports, according to the Massachusetts Port Authority, five passengers on an a flight from Dubai were experiencing flu-like symptoms. Crews are on the ground responding to the situation. Those passengers were not in West Africa, according to the agency.
This could be the hidden message of Bill Gross’ departure...
- Privately, Saudis tell oil market: get used to lower prices (Reuters)
- OPEC Members’ Rift Deepens Amid Falling Oil Prices (WSJ)
- Russia Spending $6 Billion Not Enough to Stop Ruble Rout on Oil (BBG)
- Deutsche clampdown on bad behaviour prompts exodus of traders (FT)
- Can't beat the spin: China trade data eases slowdown fears, more stimulus may still be needed (Reuters)
- China’s Exports Buoy Growth as IPhone Inflates Imports (BBG)
- Italy on Sale to Chinese Investors as Recession Bites (BBG)
- Hong Kong Protesters, Antiprotest Activists Clash (WSJ)
- Turkey Offers Military Bases to U.S.-Led Coalition (BBG) ... and the price is a small piece of post-Assad Syria
- Passenger With Flu-Like Symptoms Causes Ebola Scare At LAX (CBS)
- Boston patient deemed unlikely to have Ebola virus (Boston Globe)
The difference between 2007 and today is back then these were largely sub-prime loans and overvalued real estate mortgages, vs, today's entire global bond market bubbles from Spain and Greece to the United States.
The job market is tightening, and by any normal measure interest rates should be following suit and rising as well regardless of whether the US Dollar also strengthens.
Six ambulances have surrounded a plane this morning at McCarran International Airport amid reports that a passenger on a Delta flight from New York is showing symptoms similar to Ebola, according to NBC3 local news. A passenger on board said via Twitter, there are "two sick passengers, woman and child, came from Africa and have a fever," and "CDC is now on the scene."
With S&P futures liquidity at near record lows (but what about the HFT liquidity-providers?), it seems the major stock indices are extremely sensitive to any and every headline or JPY twitch. For the 4th time today (and Nth time this week), stocks have decoupled higher from a less exuberant bond market... every other time, stocks have recooupled lower... Fool me once, shame on you... Fool me 4 times, I am Gartman...
Despite claims of containment, Reuters reports seven more people turned themselves in late on Thursday to an Ebola isolation unit in Madrid; but following a visit by PM Rajoy, Spanish citizens can relax as the government is setting up a special Ebola committee. Following yesterday's scare in Paris, The Independent reports authorities are investigating a 'probable' case of a French national who may have contracted the disease in Africa. The World Health organization has warned that East Asia is at risk of becoming a "hot spot" for diseases - but is well prepared after SARS and avian flu but it is the appearance of a confirmed case in Brazil that is most concerning. A 47-year-old man, originally from Guinea, is LatAm's first case and suggests SOUTHCOM's "nightmare scenario" is closer than many would care to believe. Finally, the CDC has issued special guidance to 911 operators on dealing with suspected Ebola cases across America.
Two months ago, US and European equity markets exploded higher after RIA tweeted that Russia sought a de-escalation in Ukraine. Today, after an ugly week of higher volatility and even higher anxiety, RIA is at it again, tweeting the following - Kiev agrees to withdraw troops from several Eastern Ukraine cities – DPR leader Zakharchenko - and stocks have started to ramp...
Mega-startups go parabolic. Flame-out already happening.
There are some serious reserves 'estimate' discrepancies rife in the U.S. shale industry that could be at least on par with how Enron 'mis-communicated' to investors its leverage position...
UPDATE: Nevache confirmed that the "suspicion was over" and the people were allowed to leave
Following news of the death of a British man in Macedonia from Ebola, RTL reports that 60 people are locked inside a Department of Medical and Social Coordination (DASS) building in Cergy-Pontoise (on the northeast edge of Paris) following Ebola-like symptoms in 4 people who returned from Guinea.