Big bank bloodbath fears. They're ba-ack! La Monica 

Smaller Lenders Struggling to Rally  WSJ

While big banks are showing signs of recovering from the financial crisis, the outlook is worsening for many of the country's smaller community banks.

Wall Street Firms to Cut 80,000 Jobs in 18 Months, Whitney Says BL

 

7- RISK REVERSAL

Gold eyes record high as risk appetite retreats Reuters

   

CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES ------------  ECR Research Says That The Point Of Recognition Is Approaching As The World Realizes Ben Bernanke Is Naked  ZH   In recent decades, we have become increasingly accustomed to central banks coming to the rescue when stock prices and the economy slide too far. Despite the fact that economies everywhere have been stimulated fiscally and monetarily on a large scale since the outbreak of the credit crisis, the recovery has only been modest. Worse still, the recovery in the US has already clearly declined again and it looks as if this will shortly happen in Europe, too. On the basis of experience over the past few decades, the assumption is that central banks will come to the aid once more. Especially as it is evident that we cannot expect much further help from the fiscal quarter. In theory, central banks are certainly capable of helping. In practice, however, in our view they no longer have much room to maneuver. After all, the concern is that if monetary policy is loosened much further confidence in the central banks will be lost. That swiftly leads to a currency crisis and soaring long-term interest rates. In other words, a disaster for the economy.Assuming that there, indeed, turns out to be little room left for the monetary authorities, then we foresee the S&P 500 index rapidly falling below the crucial 1,010 level. In our view, this will be accompanied by EUR/USD falling over the coming months to quarters towards approximately parity. We then also envisage yields on 10-year US and German Treasuries falling further by around 0.75% before soaring due to fears of further deteriorating public finances. - ECR Research

 

 GENERAL INTEREST

U.S. Falls in Competitiveness Ranking  WSJ

FLASH CRASH - HFT - DARK POOLS

'Flash crash' may be sparking stock fund withdrawals USAT

SEC probes "quote stuffing" practices: Schapiro Reuters

MARKET WARNINGS

Retail Capitulation- Stock Outflows Surge By Over $7.5 Billion In 18th Consecutive Week Of Record Stock Market Boycott  ZH

 

This is getting really ridiculous. In the week ended September 1, domestic equity mutual funds saw a near record $9.5 billion in outflows: the biggest one week outflow in 2010 since the $13.4 billion redeemed in the Flash Crash week. The trend developing is simple: retail investors withdraw increasingly greater numbers in weeks in which the market is down even a little, and withdraw just a little in weeks in which the low-volume melt up presents them with an opportunity to get out at a better price level. Of course, the common thread is that as we have said for 18 consecutive weeks, retail just wants out. And now that, courtesy of Mary Schapiro, retail has finally put two and two together, and knows that even the regulators are concerned about redemptions, which are perceived by the SEC as being a function of distrust in market structure, we now fully expect more and more redemptions. Year to Date the total pulled out is a whopping $64 billion, incidentally with both inflows and the market having peaked at the same time in April. On thr other hand, if the market were tracking mutual fund redemptions (whose net liquidity is now down to just 3.5% of assets and getting worse by the day), the S&P would be in the 900 range. Once the destructive impact of the Fed's daily meddling in the stock market is eliminated, it will get there. The longer stocks are artificially held up at current artificial levels, the greater the crash when reality and anti-gravity finally meet.

Worst Quarter In Years Shaping Up For Hedge Funds Formerly Known As Bank Holding Companies  ZH

 

The third quarter will close in 16 market days and unfortunately for the TBTFs this means that Q3 will be the most disappointing quarter in years, unless market volume picks up dramatically in the next 3 weeks. Alas, due to the double whammy of the flattest yield curve in years, and the wholesale dereliction of stock trading by retail and other investor classes, the recently key profit drivers for Wall Street banks will be most disappointing. Since M&A has not picked up, banks will be hoping that underwriting advisory can fill in the hole. Alas, IPOs never managed to get out of the gate, which means the fate of EPS targets being met lies in IG and HY bond issuance proceeds. However, with underwriting proceeds of just 1% in the case of the former, it will take a lot for this category to recoup even a small portion of lost revenue in the much more profitable market making/flow/prop category. Lastly, the old trick of reducing NPL provisions will not work this time. All in all, if you run into your banks CEO/CFO/COO, stay out of their way: most likely they are not having a good day. The chart below shows the ridiculously low volume on the NYSE over the past two years. Note the ever declining volume, and also the Q3 average volume which is about 20% lower than a year ago. The same is most certainly true for cash and CDS trading, as many hedge funds have already thrown in the towel.

MARKET & GOLD MANIPULATION

VIDEO TO WATCH

QUOTE OF THE WEEK

 

To paraphrase Oscar Wilde Investors know the price of everything but the value of nothing. Author Unknown In therapy, you have to accept a mistake to move on.  At times, this realization will be painful but in the end it is better for you.  Right now Wall Street is in complete denial and trying to pretend all is well.  Their profits are up but all that is happening is a wealth transfer from taxpayers to this unproductive group.