Market Bloodbath, Happy Birthday Mr. President Edition

The Dow is down more than 500. The S&P is down 60. The VIX surges 35% to 32 the highest since June 2010. Implied correlation surges to the highest since last summer. ES volume surges to the highest since the flash crash. Europe is opening in 12 hours. Margin debt is near record high levels, and mutual funds have record low cash. Liquidations galore. Did we miss anything?

 

 

Market Priced In Dollar Devaluation Terms Down 8.6% YTD, Almost Back To Jackson Hole Levels

For all those wondering if Bernanke has given himself the permission to go ahead with QE3 (which is the only permission that matters, coming courtesy of his bosses at Goldman of course), here is the chart that confirms it. Priced in the anihilated "value" of dollar, the S&P is now almost back to Jackson Hole levels. It is also down 8.6% for the year. As for that far more prosaic chart of the market priced in gold, we won't even go there: basically the entire rally since the March 2009 low has now been wiped out.

Bank Of America A Perfectly Symmetric $8.88

Submitted by Tyler Durden on 08/04/2011 - 15:49 BAC Bank of America Bank of America John Paulson
For the sake of John Paulson, we sure hope he sold his BAC holdings which are now well below his cost basis. For the sake of everyone else, we also hope they sold their BAC stakes, if any. That said, we can't wait for the Fairholme Capital's conference call with Bank of America's Brian Moynihan on August 10 from 1 to 2:30 pm in which they explain to the market why it is oh so wrong on the most insolvent bank in America.

 

 

 

As A Reminder, Market-Wide Circuit Breakers Are Now Off And Only A 3,600 Drop In The DJIA Will Halt Trading

Sometimes it is worth reminding our vacuum tube-based readers that after 2pm only a 3,600 point in the DJIA will force a market close for the day, unlike the FTSE MIB and the Liffe where a 4% drop is sufficient.

And What Will Soon Be The Scariest Chart: Presenting Record Low Mutual Fund Cash Levels

Here is a chart of what could well be the biggest concern for the market, and one we have been highlights for a long time: mutual fund cash levels, which as ICI indicates were 3.4% in June, is the lowest ever. A 4% drop in the absolute value of mutual fund investments, effectively wipes out the capital buffer of most. Enter liquidations.

The Gloomy Prediction Of The Day Comes From.... Joe LaVorgna, Who Says An NFP Print Greater Than 9.2% Is Quite Possible

When looking for super bullish expectations on the economy, everyone knows where to turn to: Deutsche Bank's Joe LaVorgna of course. However, many readers probably did not know that when looking for worse than consensus expectations about the future, including those cautioning about heightened recession worries, one should turn to... Joe LaVorgna?! That's right, in a just released note to clients, the CNBC staple "pundit" has just said that tomorrow's NFP may not only be 9.2% but may in fact exceed it. He also adds that "Weak income growth, falling stocks will have "damaging effect on business confidence" and make "managers even more hesitant to spend on either labor or capital" His conclusion: "‘If the unemployment rate were to spike, investors would become even more worried about a recession, because unemployment tends to go up sharply just ahead of the onset of recession." Judging by Joey L's predictive track record it may really be time to mortgage that first born and buy everything that is not nailed down.

Watch Barton Biggs Predict The Rosy Future: The Sequel

For those who didn't get their share of laughs listening to Barton Biggs yesterday on CNBC, and his prediction of a 7-9% rally in three weeks (make that 9-11% as of today), here is your repeat chance to do just that as he has a 3:00 pm appearance on Bloomberg TV today. Incidentally, Barton will be absolutely correct if next Tuesday the Fed announces that QE3 is starting. Of course gold will be at $2000 to celebrate the Fed pushing its balance sheet over $4 trillion. Otherwise, the outlook is not so rosy...

Macro Commentary: The Damned If We Do, Damned If We Don’t Global Economy

QE2 is dead. Long live QE3! Markets rebounded yesterday when Ben Bernanke’s BFF at the WSJ Jon Hilsenrath published an article that quoted senior officials at the Fed as saying that they would give “very serious consideration” to a new round of bond purchases, aka QE3. Not to toot my own horn or anything, but I published a note back on February 2nd called Go All In On Bernanke’s Weak QE3 Hand where I said, “The problem the Fed and Chairman Bernanke now face is that the so-called wealth effect of the rising stock market has been dependent on the existence of QE2 and removing that punch bowl could cause the party to end and reverse the gains, both economic and market, that we have seen in the last 5 months.” At the time, you’ll recall, the market was solidly convinced that QE2 would be the last and final round of QE from the Fed. I disagreed. Unfortunately, it’s starting to look like I was right. However, as a long-time buyer of gold and silver, I have to admit that these never ending rounds QE are a gift from the (finance) Gods. But why should the market get excited about a policy that’s essentially failed, twice, to do anything except temporarily juice stocks higher? I think it’s very simple, the Fed cannot afford to be seen as helpless, they must do something, anything. Otherwise, why have them as Ron Paul might ask? And besides, at this point in the game, what else can they do? Lower rates? Nope, zero-bound already. Lower reserve requirements? Not likely, our TBTF banks are already scraping by with mark-to-model accounting on real estate assets that are currently worth less than they were in 2008 yet still somehow are marked at or close to par. Lowering reserve requirements would likely cause the banking panic currently growing in Europe to quickly jump the pond and land on our shores. Which leaves us with QE3/asset purchases.





Why the Market Is Tanking

Posted by : George Washington

Post date: 08/04/2011 - 14:02

THAT explains it ... 

Congratulations to all that have been buying Physical Silver and Gold...Buy The F@#$ing Dips...

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