Market Massacre: Oil Crashes 30%, Vix Explodes As S&p Craters Limit Down

https://www.zerohedge.com/markets/m...1D4kUOPv6URYit_27NJBiFC67-abk3-T8uc38u-Op38Tg

Market Massacre: Oil Crashes 30%, VIX Explodes As S&P Craters Limit Down

by Tyler Durden
Sun, 03/08/2020 - 18:28

Update (2020ET): And there it is: for the first time since the financial crisis, the emini S&P future has hit the limit down band of -5%, something it failed to do even during the May 2010 flash crash.



This means that no more trade are allowed below the limit down level until the market opens at 9:30 am ET (assuming it opens of course). Trades higher are still permitted, naturally, however that will probably not be a great comfort to all those who are rushing to liquidate with reckless abandon. But fear not: with the S&P now down more than 17% from its all-time highs just two weeks earlier, and just shy of a bear market, those who want to sell will have ample opportunity to do so in the days ahead.





* * *

Following what may have been the most drama-filled weekend since "Lehman Sunday", in which we saw not only another major spike in covid cases around Europe and the US, but also the total collapse of OPEC after Saudi Arabia unilaterally decided to flood the market with deeply discounted oil in a desperate attempt to crush the competition (yet which may backfire and soon lead to riots in Riyadh), markets are reacting appropriately and just like during Lehman Sunday, everything is crashing:

• S&P emini futures are down more than 4% in early trading, plunging as low as 2,845 and fast approaching their limit down price of 2,819 as investors around the world puke risk in an unprecedented fashion.

• Dow futures are down more than 1,000 points unwinding all of Friday's remarkable late-day rally and then some...

• VIX futures are up 16%, so one can only imagine where spot will be soon.

• With everyone rushing into safety, rates are soaring and the Ultra bond future is already up a gargantuan 7 to 232-16 in a squeeze that will surely lead to the failure of more than one macro fund still short the long-end, while the 10Y yield is on pace to hit a record all time low of 0.50%, one which screams recession.

• Naturally, the oil complex is imploding, with WTI down 27% to $30...

• ... while Brent has dropped as much as 31%, to just $33 in early Sunday trading in what Bloomberg dubbed "one of the most dramatic bouts of selling ever"...

... and indeed, today's move is the biggest one-day drop in Brent on record.



... in line with Goldman's shocking price target cut, which now expected Brent dropping into the $20s.

FX, as discussed earlier, is in freefall, with carry trades getting unwound, while commodity pairs are getting anihilated:

• NORWEGIAN KRONE FALLS TO LOWEST SINCE AT LEAST 1985 VS DOLLAR
• FALLS EXTEND IN CANADIAN DOLLAR, NORWEGIAN KRONE, MEXICAN PESO

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Finally, gold, also known to certain WSJ "experts" as a pet rock, it just spiked above $1,700 for the first time since 2012.



What happens now? Well, earlier today Morgan Stanley said that to stabilize markets, the Fed would need to announce not only a rate cut but also resume official QE...

We believe equity markets will struggle until policy-makers get back ahead of the curve with more interest rate cuts and an extension of the current balance sheet expansion and/or an official quantitative easing program – something we think is likely coming

... and with spot VIX likely set to trip 60 or more, the Fed will need to do something or risk another Great Depression, although how sending nominal bond yields into negative territory across the board will help markets remains to be seen. Maybe the Fed's time has finally run out?

Or maybe Trump - who provoked the market gods one too many times with his relentless stock market boasts as stocks hit artificial high after artificial high - actually has something up his sleeve, because moments after futures opened, he tweeted a rather cryptic "nothing can stop what's coming."

Who knows what this means, but it sounds good to me! https://t.co/rQVA4ER0PV

— Donald J. Trump (@realDonaldTrump) March 8, 2020
We'll see about that: One thing is certain: markets and traders will be closely watching and waiting everything that is coming, after more than a decade of Fed-inspired complacency, as price discovery finally returns with a bang.

 

Everything down on a massive scale. Gold is rocketing upwards. almost 1700 per ounce right now.
Opening tomorrow will be very interesting if they open at all.

 

Or any of our members savy enough on the financial realm to be able to give us insight as to what this means to the average guy . If this continues does it mean inflation , businesses closing or banks closing ? This might sound like an ignorant question but I really don't know .

 

Good morning Poltiregist,

I've been around people who worked the oil markets.

I know very little about the specifics of this specialized financial market.

The following quote is my knowledge-level:

===============

Sixty years ago I knew everything; now I know nothing;education is a progressive discovery of our own ignorance.

===============
Will Durant - US historian

......

The US is prepared.

Glance at: https://www.energy.gov/fe/services/petroleum-resources

As far as supplies go, we're in good shape. Cost of supplies to the consumer ?

 

• Lower inflation or for some of us (country dependent) might be looking for deflation at least in Q2 trough Q3 this year. Inflation rate and growth could rebound by the end of Q4
  
• Industries that is affected by the global slow down (typically service industry) will scale down their operation (laying down people, or closing down). Already seeing this happening to tourism and airlines.
  
• Different ways of conducting business. We will be looking at more online (internet based) solution for doing business interaction.

 

So i take it - if this continues there will be job losses thus debts to loan institutions not being able to be repaid . Businesses that have a loan lean that would ordinarily be in good solvent financial condition will not be able to repay the loan and go bankrupt . A domino effect or perpetual motion to destruction . Again I am not a financial guy so correct me where I am wrong .----- Or we looking at a triple whamy An unstoppable killer virus , Food shortage , and a financial crash ?

 

Again that is country dependent. Where I live the central bank significantly cut rate to prevent exactly that scenario from happening. Job loss is inevitable particularly in the most effected industries. However in less effected industries it most likely business as usual albeit with lower market valuation. IT infrastructure and pharma look good though. But than again I rely my assessment based from legal circle (appraiser & bankruptcy curator alike)

 

Wow the stock market just crashed . In less than one minute from opening this morning they shut it back down . This could make the so called " great depression " look like a minor event in history .

 

Look into your financials --- if still working, is your employment recession proof? If retired, what bargains will become available? Every dark cloud does offer a silver lining, to somebody. Now is (actually much earlier) the time to minimize the damage from a future recession.

 

I say we invade China and put millions of Americans to work in the military industrial complex. I can dream, can't I?

 

Any business related to the oil industry will be affected heavily. Wells shut down and cap at the 30 dollar per barrel mark or close to it. This directly affects truckers who haul oil, salt water , rig workers mineral lease owners and all businesses that surround the areas where wells are located. Stores, food establishments, home rentals and home sales, car loans and sales etc. It runs right through lots of communities and they go from busy and prosperous to dead and gone almost overnight.

New wells that were slated to go online are not drilled. This takes many many months after prices rise to pick back up.

The economy and the markets as we well know here were never fixed after the 2008 crash. They were simply propped up with QE. new laws that were designed to curb risky investments have once again been relaxed to allow the banks to take on risky debt.

We are right now at the same levels we were at in 2008 when everything crashed.

When you see gold climb as the market drops it is a clear sign that the dollar is not doing well.
Why silver isn't climbing at the same rate is beyond me other than to think it is being manipulated heavily to keep us lower earners from profiting from it. Silver is the poor man's gold you know.

There is to be a real crash and leveling out of the markets as they return to genuine valuation at some point.
They keep trying to blame this on corona virus and Russian and Saudi price battles but it is possible that this is simply market revaluation that has been due for quite a long number of years.

 

I'm going to keep a eye on propane prices and when the time is right will top off my tank, maybe set up a couple extra bulk tanks I have and fill them too.

 

Dow Jones free falling again today . Down around two thousand points and a long ways to go to closing bell . If this continues the financial market will be flat lining at zero in about ten days . Venezuela and its crumbled economy may have some company before the end of this month .

 

A lot of people said the stock market was a big bubble waiting to pop...Looks like the covid-19 was the needle...

 

Just another reason why we simply CAN'T use China to manufacture our crap. We had better learn from our mistakes. I'm sure in about ten years time a new virus will rear its ugly head and this shit storm will happen again.