Stocks and Precious Metals Charts - C'est la Guerre - Europe Roiled by 'Flash Crash'

 

"Citigroup Inc.’s London trading desk was behind a flash crash in Europe that sent shares across the continent tumbling after a sudden 8% decline in Swedish stocks.  The sell off was triggered by a large erroneous transaction made by the U.S. bank’s London trading desk, according to people with knowledge of the matter who asked not to be identified discussing private information.  A knee-jerk selloff in OMX Stockholm 30 Index in five minutes wreaked havoc in bourses stretching from Paris to Warsaw toppling the main European index by as much as 3% and wiping out 300 billion euros at one point." 

Bloomberg, Citi’s London Trading Desk Behind Rare European ‘Flash Crash’, 2 May 2022

 

"Plus ça change, plus c'est la même chose." 

Jean-Baptiste Alphonse Karr, Les Guêpes

 

"The market was thrown into confusion on 2 August 2004 when Citigroup pushed through EUR11 billion in paper sales in two minutes over the automated MTS platform.  As the value of futures contracts fell and traders moved to cover their positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices.  

The strategy was dubbed Dr Evil, after the Austin Powers character, in an internal e-mail circulated by the traders.  Immediately afterwards MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time.  MTS also suspended Citigroup from trading on its bond network for one month after finding that the UK bank breached certain market regulations." 

Finextra, Citi bond traders indicted over 'Dr Evil' trade, 19 July 2007

 

"In a community where the primary concern is making money, one of the necessary rules is to live and let live.  To speak out against madness may be to ruin those who have succumbed to it.   So the wise in Wall Street are nearly always silent.  The foolish thus have the field to themselves.   None rebukes them." 

John Kenneth Galbraith, The Great Crash of 1929 

 

Seriously, how can one expect a multi-billion dollar trading platform or its regulators to bother with safeguards and protections against sociopathic rogue traders or systemically critical 'typos.'   LOL

The watchdogs of the fourth estate was too busy swooning over the international cast attending the Michael Milken conference at the Beverly Hilton to be concerned about any of these market-busting, existential questions.

Stocks were slumping hard today, confirming those lower lows.

And then we saw a miraculous bounce in the afternoon to take them back to the green. 

Sounds like a bit of bottom dithering and then a bounce.

Who could have seen that coming?

Gold and silver were slammed today, ahead of the FOMC on Wednesday and the Non-Farm payrolls on Friday.  

 What a surprise.

Although silver bounced back a bit in sympathy with equities.

The dollar bounced back up to the higher 103 handle.

What will they think of next?

Below is an update to the market dislocation 'CrashTrak' model.  

As a reminder, major market dislocations are low probability events, even at this stage.  

And we are not looking at the number of times that the markets have traced this pattern, and it has not worked out to a major further decline.

The next two steps in this model are by far the most important.  So far this is just flirting with disaster.

And as always, we may recall that we are in the modern era of major market intervention with easy money.

Have a pleasant evening.

 

 

Stocks and Precious Metals Charts - Second Lows Are In - Non-Farm Payrolls Next Week

 

"Proclaim the truth and do not be silent in fear.  We have had enough pressure to be silent.  Cry out with a thousand voices.  The world is rotten because of silence. 

You know that every evil is founded in the love of self.   Self-love is a fog that takes away the light of reason, which sustains itself by the light of faith.  One is not lost without the other.  

Love transforms us into what we love.  Out of darkness is born the light.  Be who God meant you to be, and you will set the world on fire." 

Catherine of Siena

 

"Non pas cette pauvreté facile, intéressante et complice, qui fait l’aumône à l’hypocrisie du monde, mais la pauvreté difficile, révoltante et scandaleuse, qu’il faut secourir sans aucun espoir de gloire et qui n’a rien à donner en échange.  La fortune dont la pratique séculaire est de faire tourner sa roue dans les ordures.

C’est ce qui permet à Clotilde d’aller chez lui, sans exposer à la boue d’un luxe mondain ses guenilles de vagabonde et « pèlerine du Saint Tombeau ».

De loin en loin, elle vient jeter dans l’âme du profond artiste un peu de sa paix, de sa grandeur mystérieuse, puis elle retourne à sa solitude immense, au milieu des rues pleines de peuple.

Il n’y a qu’une tristesse, lui a-t-elle dit, la dernière fois, c’est de n’être pas de saints."

Léon Bloy, La femme pauvre

 

And there goes April. 

Non-Farm Payrolls next week. 

Stocks swooned to set those second lows without much doubt now. 

Gold and silver rallied, but were neatly knocked back down into the close. 

The Dollar fell from its recent lofty heights, but still remains fairly lofty all things considered, mostly the Yen and the Euro.

A bounce in the major stock indices at this point is customary, perhaps after some more dithering around.

And let's hope it succeeds at making a higher high.

 But if not, we'll always have Paris. 

Have a pleasant weekend. 

 

 Rally that Fails as Hallmark of Major Market Dislocations 

 

Stocks and Precious Metals Charts - Without Shame or Honor - Hitmen

 

“The most tragic thing in the world is a man of genius who is not a man of honor." 

George Bernard Shaw

 

"We may make ourselves popular by telling our fellow citizens that they have made Discoveries, conceived Inventions, and made Improvements; We may boast that we are the chosen people; we may even thank God that we are not like other men.  But after all it will be but flattery, and the delusion, the self deceit of the Pharisee."

John Adams, Letter to John Taylor,  29 July 1814

 

“Melancholia is the beginning and a part of mania.  The development of a mania is really a worsening of the disease.  A period of lewdness and shamelessness exists with the worst type of manic delirium.”

Aretaeus of Cappadocia

 

"Time and again we hope for better leaders, but all too often those hopes are dashed.  The reason is that power causes people to lose the kindness and modesty that got them elected, or they never possessed those sterling qualities in the first place.  In a hierarchically organised society, the Machiavellis are one step ahead.  They have the ultimate secret weapon to defeat their competition.  They’re shameless.” 

Rutger Bregman, Humankind: A Hopeful History

 

“The real conflict is the inner conflict.  Beyond armies of occupation and the  the sacrifice of many victims of extermination camps, there are two irreconcilable enemies in the depth of every soul: good and evil, sin and love.  And what use are the victories on the battlefield if we ourselves are defeated in our innermost personal selves?”

Maximilian Kolbe

Stocks had a number of ways to demonstrate that they have put in a decent bottom from this recent flirtation with lower lows.

The action today was not one of them.  

A gap open and sprint higher that flopped into the close reeked of artificiality.

Gold and silver did manage a bounce from the expiration lows, and went out nearer to the highs of the day.

But to extend that in the face of titanic monetary events is key.

The Dollar continued its march higher, taking on the 103 handle and then some.

Or should we more correctly say that this is not Dollar strength so much as Yen and Euro weakness?

And is this Dollar strength more like the receding of the ocean, prior to some greater seismic event?

The strong Dollar has had its impact already, shaving several whole points off GDP in a yawning trade imbalance, fostered by a stronger dollar.

A strong Dollar favors imports, discourages exports, and encourages hot money of finance to seek acquisitions abroad.  

Save yourself from the madness, if you will.

And you may be grateful yet, if you do so moderate your passions, while remaining standing safely and faithfully, on higher ground.

Have a pleasant evening.

Stocks and Precious Metals Charts - Children of Wrath - The Truth Will Be There Yet

 

"With a monetary expansion intended to help cure a credit bubble crisis that is not accompanied by significant financial market reform, systemic rebalancing, and government programs to cure and correct past abuses of the productive economy through financial engineering, the hot money given by the Fed and Treasury to the banking system will not flow into the real economy, but instead will seek high beta returns in financial assets. 

The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country.  It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people.

Those who have taken a huge share of the last three bubbles would like to stop the bubble now, keep their gains, and return to a system of fiscal restraint with light taxation on their windfall of assets.   So why does this not just simply happen?  Because the political risks become enormous. 

It is difficult to reduce a population of free men into debt slaves, without risking a significant reaction. Therefore, it seems most likely that the government and the Fed will try to 'muddle through' for the time being, and look for an exogenous event [such as a war] to break the stalemate." 

Jesse, October 2009 

 

"Even a purely moral act that has no hope of any immediate and visible political effect can gradually and indirectly, over time, gain in political significance." 

Václav Havel, Letter to Alexander Dubček, August 1969

 

"Thus we see how the neoliberal utopia tends to embody itself in the reality of a kind of infernal machine, whose necessity imposes itself even upon the rulers.  Like the Marxism of an earlier time, with which, in this regard, it has much in common, this utopia evokes powerful belief - the free trade faith - not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it. 

For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality.  

They want independent central banks.  And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses." 

Pierre Bourdieu, L’essence du néolibéralisme

 

“I think that when the lies are all told and forgot the truth will be there yet.  It don't move about from place to place and it don't change from time to time.  You cant corrupt it any more than you can salt salt.”

Cormac McCarthy, No Country for Old Men

 

Stocks were in bounce mode today, risk on, the wash in the wash n' rinse cycle. 

The Dollar, fueled by euro and yen weakness, moved higher on the DXY index to just under 103.

Gold and silver lost some further ground.

Some tech behemoths like 'Meta' reported after the bell.

Bully will try to defend their numbers as 'less worse than expected.'

The oligarchs think that they have the children of wrath firmly in hand. 

Let's see what they're up to next.

Have a pleasant evening.