S&P Crashes Most Since US Downgrade As VIX Explodes, Bond Yields Flash-Crash

CNBC Pisani: “This has the feel of a textbook pullback”

This was the biggest drop for the S&P since August 2011

The 410-day record streak without a 5% correction is over… Nasdaq is over 7% off highs, DOw and S&P over 8% off their highs…

Only Nasdaq remains green in 2018…

Some headlines…

• S&P 500 CLOSES DOWN 113.33 POINTS, OR 4.10 PERCENT, AT 2,648.80
• DOW JONES CLOSES DOWN 1,176.68 POINTS, OR 4.61 PERCENT, AT 24,344.28   
• NASDAQ UNOFFICIALLY CLOSES DOWN 271.50 POINTS, OR 3.75 PERCENT, AT 6,969.45

Selling continues after the close…

Does that look like a ‘textbook’ pullback?

Someone got a major tap on the shoulder…

This is Jay Powell’s first full ‘official’ day on the job!

Before we get started:

Some historical context: On this date in 1637 the Tulip price index started its crash

— GreekFire23 (@GreekFire23) February 5, 2018

Gold is now outpacing stocks and bonds notably on the year…

And the biggest 5-day crash in aggregate bond and stock returns since Aug 2015’s China devaluation and US flash-crash…

And late last week saw a Hindenburg Omen strike…

Putting last week into context – stocks and bonds losses were outliers…

US Equities broke critical technical support levels today.

The Dow, Small Caps, and Trannies erased all of 2018’s gains today…

The Dow ripped through its 50DMA but found support at its 100DMA…

VIX exploded today…

As Morgan Stanley notes, VIX futures traded 897k total across the curve so far today.   Previous FULL DAY record was 850k  (aug 10 2017). Liquidity in the top of the S&P futures book 50% worse than Friday. Avg available size is 111 contracts since 3PM today on the top of the S&P book.   Friday avg. size was 209 (for the entire day   Beginning  of Jan this was 800.  End of Jan it was 300.

And for now Equities remain alone at the extremes across asset-classes…

High yield bonds extended their losses to the lowest since Dec 2016…

And ironically, having been blamed for the collapse in stocks, bond yields flash-crashed (30Y back below 3.00%) as equities got slammed…

The entire bond yield complex is down around 6 to 10bps…

Great News ‘Murica! The Dollar rallied today – all it took was panic liquidity needs…

Gold and Silver ended the day positive, copper unchanged after a strong start and crude notably lower…

Bitcoin was a total bloodbath today – making for one of its biggest crashes ever…

But the entire crypto space was utter carnage…NOTE – as stocks collapsed so cryptos saw a bid which bounced ETH back to unchanged on the year…

And finally, amid a ‘modest’ pullback in stocks, investors have slashed their expectations of the number of rate-hikes in 2018…

From an 80% chance of a 3rd rate hike to a 50% chance in two days. For those hoping for Powell to rescue them.. here’s what he said in 2012!!

We started with CNBC so we’ll end with someone who perhaps gets it:

CNBC Santelli: “This is about Central Bank religion gone bad”