Overnight Market: Futures Breaking Below Draghi-Believe Lows

S&P futures are being crushed overnight. Currently trading below the levels of September 5th Draghi comments (back under 1400) and -11pts from the close. AUD is weak, Treasuries are modestly bid (as is the USD) and commodities are rolling over. The catalyst? We see four things: 1) Delayed reaction to global supply chain implications of an AAPL outlook cut (and/or overseas holders hedging) as well as some missed earnings in China; 2) Major Aussie quasi-bank Banksia (yes, its really called that!) hitting the skids (a la Northern Rock) bringing fear that Australia is entering 2008-mode USA; 3) a NYT article which could be inferred as a direct attack on the Chinese political faction (exposing Wen Jiabao's hidden billions); and/or 4) a realization that at 14-plus x P/E multiples, the US equity markets are not pricing in anything the kind of possible pain a fiscal cliff scenario (or Romney-ite in the Fed) might bring. Of course, the need for a narrative is irrelevant, the most net long position since 2008 is unwinding (for now) but by the time we wake for New York's morning, things could have reversed once again.

 

S&P 500 futures are down over 11pts at 1396.50 - 100DMA is 1388.75, 200DMA is 1364.5

 

AUDJPY is 1 big figure down from yesterday's highs.

TSY ylds are 6bps down from yestereday's highs.

WTI is at the lows of the week - around $85.

Gold and Silver are sliding - down 1% on the week at $1703 and $31.79 respectively.

The NKY, Tpoix, and Hang Seng are down around the same 1% or so as US equity futures but the Shanghai Composite is down 1.7%.