The slump in US markets added to steep losses in Europe and Asia. The Standard & Poor’s 500-stock index and the Dow Jones plunged more than five percent and the Nasdaq fell over eight percent. In Europe, the Stoxx Europe 600 was down 6.9%. In China, the benchmark Shanghai composite index ended the day 8.5% lower and Japan’s Nikkei closed 4.6% in the red.
The government’s intervention to devalue the yuan two weeks has triggered a panic selloff, with many fearing the world’s second largest economy might be in a worse shape than thought.
Examples of just how broken the market was this morning ~ link ~
With 4,500 'crash' events this morning, we thought it worth surveying some of the carnage that 'liquidity-providing' high-frequency scapegoats left in their wake at the open...
Is THIS Black Monday Crash the BIG ONE? - It does not matter ~ link ~
After losing 11% last week, Shanghai this morning was down almost -9% at one point, after lunch went back up to -6.5%, and ended its day at -8.49%. A Black Monday for sure, but is this the BIG ONE? It really doesn’t matter one bit. Unless perhaps you persist in calling your self an investor, in which case we pity you, but not for losing your shirt. Because God knows we’ve said enough times now that there are no functioning markets anymore, and therefore no-one who can rightfully lay claim to the title ‘investor’.
Plenty amongst you will be talking about economic cycles, and opportunities, and debate how to ‘play’ the crash, but all this is useless if and when a market doesn’t function. And just about all markets in the richer part of the world stopped functioning when central banks started buying assets. That’s when you stopped being investors. And when market strategies stopped making sense.
Central banks will come up with more, much more, ‘stimulus’, but what China teaches us today is that we’re woefully close to the moment when central banks will lose the faith and trust of everyone. After injecting tens of billions of dollars in markets, which thereby ceased to function, the global economy is in a bigger mess then it was prior to QE. The whole thing is one big bubble now, and we know what invariably happens to those.
Almost NO Liquidity ~ link ~
Curious why few if any traders can actually execute any trades, whether buys or sells? The reason is that despite the relative calmness of the index prints, what is going on beneath the surface is an unprecedented wave of constant halt and unhalts as all stop levels were taken out, many in circuit breaker territory, making it virtually impossible for any matching engine to, well, match buyers and sellers.
Here is a sample:
NASDAQ goes positive for the day - Mission Accomplished by the Plunge Protection Team ~ link ~ Also see: DOW up 1,000 points from opening lows ~ link ~ link ~ China is an example of the fact that this type of intervention cannot continue in the face of widespread belief in the failure of the economic system! Stirling
The U.S. stock market just took the largest roundtrip ever. Specifically, in the first 3 hours and 40 minutes of trading today, the Dow posted the largest intraday swing in history:
So the Fed is keeping its foot planted squarely on the neck of savers and retirees for the contemptible purpose of keeping the Wall Street gamblers in free carry trade money, thereby hoping to trigger another stock market up-leg in its misbegotten campaign to generate economic growth by showering the 1% with fantastic “wealth effect” windfalls.
Rolling a Wheelbarrow of Dynamite into a crowd of Fire Jugglers ~ link ~
John Hussman has the right to gloat on this Black Monday morning as global stock markets meltdown under the weight of central bank created debt, insane debt financed corporate buybacks, and stock valuations rivaling 1929 and 2000 levels. He has been scorned, ridiculed and laughed at by the Ivy League educated sociopathic Wall Street titans of greed and avarice. Only in a warped, manipulated, corrupt, rigged financial world would those who speak the truth, use facts, and honestly assess the markets based on historical relationships would a man like John Hussman be abused by the elitist Wall Street lemmings. He has too much integrity and class to lower himself to the level of Wall Street hucksters. His letter this week is heavy on substance, facts, and sound reasoning. Therefore, it is of no use to CNBC cheerleaders or Wall Street shysters. His lessons are timeless.