Stocks Skid; Dow Drops 200, S&P Below 1,370 (click for story)

Carnage Ala Milanese: Italian Stock Bloodbath

UPDATE: *ITALY'S FTSE MIB INDEX SLIDES 5% and Spanish 10Y at 6%
Italian bank shares are down over 8.5% in the last two trading days as all the majors (Intesa SanPaolo, Unicredit, Banco Popolare -7.14%, UBI Banca, Banca Pop Milano -6.3%) are still HALTED. As 10Y BTP spreads break above 400bps for the first time in over two months, it seems the marginal buyer of last resort has left the building and with little if any performing collateral left, credit spreads (and LTRO Stigma most notably) is breaking to close to record wides. We wonder how long those nasty speculators will be blamed for an attack and the short-selling ban will re-materialize (since it was so successful last time).

Gold And Silver Go Vertical

UPDATE: Added S&P 500 in Gold reversion post LTRO2/Bank Stress Test
Are investors rotating from the 'safety' of Apple to the new 'safety' of Gold and Silver? Because the next time there is a wholesale margin call, which courtesy of soaring margin debt will likely be today, speculators will have to sell the one asset that is outperforming everything. You guessed it...

It's Getting Ugly

Dave in Denver at The Golden Truth - 1 hour ago

*There will be a time when the middle class gets hit by a 2x4 in the back of the head that they never saw coming -* Dave in Denver, circa 2004*...That 2x4 is in motion -* Dave in Denver, today Major European bourses were down anywhere from 2% to 5% (Italy). Italian and Spanish 10yr sovereign bond yields are soaring again. Large fissures are forming again now that the ECB's latest version of money printing (LTRO/QE) has been applied and the dust has settled. The problem is that the financial equivalent of Mt. Vesuvius is starting to rumble again. I visited the ruins at Pompeii ... more » 

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Artemis On Volatility At World's End: Deflation, Hyperinflation And The Alchemy Of Risk

Imagine the world economy as an armada of ships passing through a narrow and dangerous strait leading to the sea of prosperity. Navigating the channel is treacherous for to err too far to one side and your ship plunges off the waterfall of deflation but too close to the other and it burns in the hellfire of inflation. The global fleet is tethered by chains of trade and investment so if one ship veers perilously off course it pulls the others with it. Our only salvation is to hoist our economic sails and harness the winds of innovation and productivity. It is said that de-leveraging is a perilous journey and beneath these dark waters are many a sunken economy of lore. Print too little money and we cascade off the waterfall like the Great Depression of the 1930s... print too much and we burn like the Weimar Republic Germany in the 1920s... fail to harness the trade winds and we sink like Japan in the 1990s. On cold nights when the moon is full you can watch these ghost ships making their journey back to hell... they appear to warn us that our resolution to avoid one fate may damn us to the other. 

 

 

Stocks, Spanish Bonds Drop as Treasuries, Yen Strengthen

Eric De Groot at Eric De Groot - 1 hour ago

Who would have predicted falling stocks, rising Treasury prices and Yen? The message of the markets did. Leveraged money flows told us something was up two weeks ago week the bond market and Yen diffusion indexes (DI) both triggered bullish setups above 60. Follow the message of the market, my friends. The talking heads will waste both your time and money. Headline: ... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

Gold Moves Sharply Higher For No Particular Reason Yet Seen - Remarkable Divergence

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Path of Least Resistance Is Down

Eric De Groot at Eric De Groot - 3 hours ago

A test and close above support (3/08 and 3/13 gaps) on shrinking volume will generate a bullish setup(s). Volume on 3/08 and 3/13 were 117 and 184 million, respectively. Bullish setups and technical divergences will illustrate the transition from distribution to accumulation. The invisible hand knows the path of least resistance for both the equity trend and headline spin is down. ... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Obama Speaks On The Economy And Taxing Millionaires

Earlier, we heard Santorum bidding a fond adieu to the public world, most likely forever, and now it is the turn of the president. Only he won't be resigning, but instead he will once again make the argument why the rich have to pay more in taxes, and why the The Crony Capitalist Cramdown, pardon the Buffet Rule, should be enacted for everyone and why Congress must pass it. We can only wish that the president dedicated as much time and energy to getting America a budget (it still does not have one) as he does to delineating various class distinctions. Today's challenge, should anyone chose to accept it: take a shot every time the TOTUS says "fair" and any variation thereof.

Volume Is Back

With ninety minutes left in the trading day, NYSE volume run-rate is its highest of the year for a non-OPEX day. S&P futures are also showing heavy volume - around 60% above average for the time of day.

Santorum Said To Quit Presidential Race

According to various media reports, still officially unconfirmed, Rick Santorum will end his presidential campaign. Such as this one from CNN: "Republican presidential candidate Rick Santorum will announce he will suspend his campaign on Tuesday at an event in Gettysburg, Pennsylvania, a senior adviser to the campaign tells CNN." The live webcast to the Santorum address can be watched below after the jump.

Europe's Old Nemesis, Illiquidity, Is Back

One of the most-watched stress indicators from the European crisis (pre-LTRO) is starting to flash orange warning lights again. The 3-month EUR-USD basis swap (or how to get USD funding when no-one else will help) has just deteriorated its most over the past 5 days since mid-December. Having never realized more normalized levels from early last year, the rapid acceleration in this funding instrument's use last year and now this year is perhaps why bank stocks are under such incredible pressure as insolvency meets illiquidity head on once again.

VIX Nears 21% With Term Structure Flattest In 4 Months

It seems the short-end of the volatility term structure is snapping shut on a few nickel-in-front-of-a-steamroller gatherers...

Muddy Waters Is Back, Alleging Fushi Copperweld (FSIN) Represents High Risk Of Fraud

As of earlier today, Sino Forest is official bankrupt, courtesy of ISDA's determinations committee which found just that, despite Sino's attempt to scapegoat Muddy Waters in an idiotic attempt at redirection. So is Muddy Waters sitting on its laurels, having been vindicated? No: the company just released the following analysis this time focusing on "The Fraud School', our old friend RINO as well as new entrant to the alleged fraudcap space: FSIN.

AAPL Tail Leading S&P 500 Dog Lower

Submitted by Tyler Durden on 04/10/2012 - 12:16 Apple AAPL is down well over 2% from its $600bn market cap peak this morning and breaking closing VWAPs one-by-one as it drops. Rumors of liquidations across funds in US and Europe will mean margin calls force funds to sell the one performing asset that is the functional equivalent of Gold in 2011: Apple.

Guest Post: Calling All Crash Test Dummies: Big Crash Ahead

I know, I know: the stock market will never go down because Ben Bernanke and the other central bankers won't let it. It's funny how the "Bernanke/European Central Bank Put" is ranked alongside gravity as a rule of Nature until markets roll over; then talk shifts from purring adulation of central bankers' godlike powers to panicky calls for another flood of liquidity/free money to "save" the market from the harsh reality of global recession. The crash test dummies know better: they've been called up for a humongous crash. The basic mechanism that is being overlooked is Liquidity Resistance. This is akin to insulin resistance, where insulin becomes less effective at lowering blood sugars. The amount of insulin required to maintain normal blood sugar levels increases as resistance rises until even massive doses of insulin no longer have the desired effect and the system crashes.

S&P 500 Breaks 50DMA For First Time In 4 Months

Five down days in a row (first time in 5 months) for the S&P 500 (cash) and it has broken its 50DMA for the first time since 12/20/11. Notably the equal-weight S&P 500 broke the 50DMA yesterday and is now down 4.4% (versus -3.5% for the cap-weighted S&P 500) from its highs on 4/2. At what point do levered liquidations (VIX nearing 20% at one-month highs) cause the S&P 500 index dog to wag its AAPL tail as opposed to the other way around as it remains the outperformer relative to European equity and US and Europe's credit markets.

Up in Asia, Down in NYC

by David Schectman, Miles Franklin:

Just like last night, gold, silver, platinum and palladium are on the rise in Asia.  The Asians buy physicals.  As the sun moves to the West, you can usually expect selling to commence at exactly 3:00 a.m. when they arrive at work in London.  By 8:00 a.m. the sell-off games continue at the COMEX as the funds and bullion banks screw around with paper contracts.  In the end, the physical market will dictate the price.  Let them play their games.  They are running out of time.  As soon as QE3 is announced, most likely by June, but no later than September, it is a new ball game for gold and silver.  Be patient.  Keep accumulating at these prices.  2012 will end well for the precious metal complex.
Richard Duncan, author of one of my favorite books, The Dollar Crisis, has written a new book.  This one is entitled, The New Depression:  The Breakdown of the Paper Money Economy, and I highly recommend it.
Read More @ MilesFranklin.com

Why Obama’s JOBS Act Couldn’t Suck Worse

by Matt Taibbi, Rolling Stone:

Boy, do I feel like an idiot. I’ve been out there on radio and TV in the last few months saying that I thought there was a chance Barack Obama was listening to the popular anger against Wall Street that drove the Occupy movement, that decisions like putting a for-real law enforcement guy like New York AG Eric Schneiderman in charge of a mortgage fraud task force meant he was at least willing to pay lip service to public outrage against the banks.
Then the JOBS Act happened.
The “Jumpstart Our Business Startups Act” (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.
In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.
Read More @ RollingStone.com

Is the Fed Losing Confidence?

by Brian Pretti CFA, Financial Sense:
These comments will mean little to market outcomes in the next few days or months, perhaps even years for all I know. I’d like to address a big-picture macro that I think will be important somewhere down the road and will act perhaps as a behavioral bookend to the beginning of the bond bull market in the early 1980’s. But indeed if I’m anywhere even near the mark on this one, bonds will only be one part of a much larger story.
Let me set the stage. Although many of you may be far too young to remember, Arthur Burns was the Fed Chairman when true inflation really started to heat up materially in the 1970’s. Although Paul Volcker was and should be credited with having the intestinal fortitude as a central banker to break the back of inflationary psychology as well as price acceleration reality, his predecessor Arthur Burns did not sit back and allow inflationary pressures to brew unattended. Unfortunately for and unbeknownst to Mr. Burns at the time, the markets were not in the mood for incremental action. Another unfortunate issue is that since Mr. Volcker, we have seen little central banker intestinal fortitude leading us to our present circumstances, but that’s beside the point.
Read More @ Financial Sense.com

 

Pento: Return to the Gold Standard & Real Estate to the Rescue

from KingWorldNews:
Today Michael Pento told King World News that bankrupt countries around the world will be forced to return to the gold standard. Pento, who founded Pento Portfolio Strategies, also discussed real estate, tech, gold and cyclical bubbles. Here is what Pento had to say: “The prevailing economic wisdom of today is that the world’s economy is healing due to the notion that the popped real estate bubble, which took down global banking systems, has now bottomed. However, the sad truth is that both the global housing market and economy are still in the Intensive Care Unit. They are merely struggling to breathe on the artificial respirator of low interest rates.”
Michael Pento continues @ KingWorldNews.com

Revisited: Three Data Points That Prove Europe Cannot Be Saved

from Gains Pains & Capital:
I first published this article a few weeks ago. Given the speed at which Europe is unravelling I think it’s worth reviewing as it summates the situation very clearly.
I continue to see articles in the media claiming that Europe’s problems are solved. Either the folks writing these articles can’t do simple math, or they don’t bother actually reading any of the political news coming out of Europe.
Here are three data points that GUARANTEE Europe will collapse at some point in the near future:
Fact #1: EU Banks as a whole are leveraged at 26 to1.
This is, of course, based on the assets the banks are reporting. According to independent sources, the leverage levels are in fact far, far greater than this (though 26 to 1 is already bordering on Lehman Brothers’ leverage levels).
Indeed, as far back as September 2011, PIMCO’s Co-CIO, Mohamed El-Erian (one of the most connected of the financial elite) noted that French Banks were running REAL leverage levels of almost 100-to-1.
Read More @ GainsPainsCapital.com

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