ORIGINAL POST: Now things are getting hairy.
If you’re late to turning in, very early in the morning, Europe was getting sucked once again into a sovereign-debt inspired vortex, with yields rising, equities falling, CDS widening, and auctions going very poorly.
Then things bounced back a bit. We got some good US data (another sub-400K initial claims number) and a rumour went around about the ECB, perhaps, lending money to the IMF to create a big leverage-monetization daisy chain.
But that rumour was denied, and now things are getting bad.
The Dow is off 150, and the NASDAQ is down 2.2%.
Especially worrisome is the action in banks, like Jefferies. It’s down 5%.
Bank of America is down below $6/share again.
Meanwhile, gold is getting smoked, down below $1720.
UPDATE: We’ve heard a little buzz from traders about the super-committee probably falling. It could have something to do with the bout of risk-aversion.
MORE: Here’s a note that was just blasted out from JPMorgan on what’s causing the selloff.
Market update – at a loss to find something specific really “negative” in the last 30 min. There has been a steady deterioration in credit markets for weeks…not just sov yields/spreads but in particular funding market indicators. Equities had been pretty relaxed to this for weeks but for some reason in the last 24 hrs it has become more in focus. The assumption from many had been that by now the ECB would have stepped in and while it may become “more flexible” (per Reuters), it doesn’t seem like any large Fed/BOE-like QE program is coming (if it were, the euro would be weak and gold strong and instead the opposite is occurring ). The EFSF looks like a complete dud at this point (see that Reuters article from ~20 min ago below – I guess if you had to point to one “cause” of the decline it was that headline). Like the late Wed sell-off, the room has become much more quiet on this decline (seems more futures driven and not panicked single stock liquidation). – JPM
Update 1:59: Two hours to go, and things continue to lok pretty hairy. Dow off 170. Banks continue to getting whacked.