This is what happens when the market prices in $1+ trillion in loose money from the Chairman, and gets a sharp stick in the eye instead.
The VWAP algo attractor comes through in the clutch:
Curve inversion has begun:
Stocks plunge, commodities collapse, Morgan Stanley refutes facts
presented by a fringe blog, gold and precious metals are liquidated as margin calls explode, dollar soars as every bank in Europe scrambles to get its hands on every Benjamin it can get, Treasurys surge to never before seen prices even as CDS of the underlying countries soars, and the DJIA posts the third biggest weekly drop in history (and the week is not even over yet)...
...And beneath it is all is the creeping realization that the Fed's most recent global bailout action with the ECB, the SNB, the BOJ and the BOE does not start for another 20 days
, or October 12, 2011
. That's right: three weeks in which there is nothing in place
to provide the much critical trillions of dollar that every bank in the world so desperately needs. We wish Europe all the best in pretending for 20 days that it can survive on its own, even as Greece is about to become the riotcam's favorite destination once again.
… Oh yes, and Goldman is about to announce it was just stopped out on its 1.55 EURUSD «tactical» trade:
«Trade Update: Stopped out of long EUR/$
Having traded for a while quite closely to our stop, our long EUR/$ recommendation has finally been stopped out for a theoretical loss of 4.2% including carry.
We recommended this idea on the back of two main assumptions: continued Dollar downside pressure and a gradual decline in the fiscal risk premium in the Eurozone. The latter has obviously been rising in recent months, but at the same time Dollar downside pressures also intensified through July and August as illustrated by very weak BBoP data in recent months. As a result, EUR/$ remained range bound for most of the summer. However, the recent sharp increase in risk aversion, much of this originating in Europe, and upward pressure on the USD across a wide range of currencies lately, has pushed the cross below our 1.35 closing stop.»
Just when it seemed that Goldman's all time unbest sell side analyst, FX «guru» Thomas Stolper, may actually have a strike at bat with his long suffereing EURUSD call which has had a worse Sharpe ratio than even John Paulson's hedge fund over the past 12 months, we are sad to inform our readers that Stolper is and continues to be the perfect contrarian signal (pari passu with that other all time fade: Barton «Notorious» Biggs) with a 0.000 statistical average (which, as everyone knows, is just as valuable as a 1.000). Because just as we predicted earlier today
, when we said that "Goldman is about to announce it was just stopped out on its 1.55 EURUSD «tactical» trade"
, Goldman has just announced that it was "Stopped out of long EUR/$
." Something tells us the slow money will not be happy to read this when they roll into the office between 10 am and 1 pm tomorrow.