The NASDAQ is only down 195 and normally it wouldn’t be a big deal. But at the heart of this collapse are the banks. THEY are funded by these banks and they’ll do whatever it takes to save them. Understand something, empires rise and fall based upon liquidity. We are a nation of debt and without the banks to finance our chicanery, the entire house of cards will fall.
Because of this, I expect some sort of government intervention by Sunday night.
Why do I feel this way?
Observe
Again, on the surface — a 10% drawdown in the XLF over the past month isn’t a big deal. But the smaller banks featured in the KRE are down 20% this week alone. What’ll end up happening is big bank will eat little bank and I suppose this was part of the plan all long — OR perhaps they’re just idiots.
Either way, the volatility is extreme, as evidenced by the VIX blowout –now +20%
To be down just 205 on news the second largest bank failure in the history of the US is rather bland. I would expect to see something akin to 2008, whereby bids vanish alongside the money of those who had it coming.
I will have you know, I have recovered some of my losses. I made a series of dumb reactionary trades earlier and already have a 100% long book. I am down about 1%, mostly due to a 14.5% gain in UVIX — which I just closed out. I am presently hedged with 40% weight in inverses.
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