What we have witnessed during the last two weeks  in the stock markets is rather extreme. With 99% of all fund managers totally lost in space, all fully invested, blaming S&P, there have been some people around, willing to think outside the box, and stick to their research, irrespective of Ben printing ES futures, and the crowd following for no reason.

Welcome to the father of Black Swans and their fund, Universa, who correctly predicted what was to happen.  From Universa.

Full must read report, click here.

One of our favorite charts is back, explaining the world of Finance so everybody understands. Great insight as we still follow this chart. Next up, breakdown of the currency world?Courtesey Long.

Many Indices have now oficially entered the Bear Market. Once again, we got that Heinz Ketchup bottle effect. You shake and shake, it never comes out, and all of a sudden everything is out….Below, Dax, Stoxx, Shanghai and OMX, all entering the 20%  or more correction.

Let us see if they can create another QE ver 3.0 bull tomorrow….

As the World is imploding, let’s quickly remember what happened last year. Stoxx had a similar sell off and bounced then off the support level. Are we about to witness a similar move again, or is this time different? One thing is for sure, the market is totally driven by Algo Trading only.

With the SPX at Jackson Hole levels from last year (adjusted for the USD) let’s get prepared for the QE3. Remember POMO? Quick recap of what that means, courtesey Omid Malekan.

Like we argued, the dip turned into a squeeze. Currency moves turned out to be a major non event. The Stoxx rallied right back up to resistance levels, with the Banks trading strongly. It looks we will be up for at least one serious squeeze while trying to brake the 10 day resistance levels. Some of our risk markets are now trading in positive territory. Beware the upside….Stock intraday charts below,

…and the IBEX and MIB surge some 4%. Welcome to short gamma….

Ft.com
US Treasury Secretary Timothy Geithner will stay on in the role, despite considering stepping down after the government debt ceiling limit was raised. Mr Geithner confirmed on Sunday that he will remain at his post at President Barack Obama’s request. ”I believe in this president,” http://ftalphaville.ft.com/thecut/2011/08/08/645791/geithner-to-stay-on-as-treasury-secretary/

At least six more Swiss and one Liechtenstein private bank have attracted the attention of US prosecutors investigating whether Swiss bankers helped rich Americans evade tax, the FT reports. The revelations http://ftalphaville.ft.com/thecut/2011/08/08/645746/us-extends-swiss-banking-investigation/

The ECB and G7 gave clear signals on Sunday night and Monday morning that they would intervene in the markets for Italian and Spanish bonds and foreign exchange respectively in an effort to soothe markets http://ftalphaville.ft.com/thecut/2011/08/08/645731/ecb-and-g7-move-to-reassure-markets/

RBS has posted pre-tax loss of $1.1bn as impairments on Greek bonds and Irish mortgages surged, sending its shares to a two-year low in early trade during London markets, Reuters reports. Its investment banking unit saw revenues fall 35 per cent, http://ftalphaville.ft.com/thecut/2011/08/05/644471/rbs-hit-by-big-loss-on-greece-and-ireland/

Wsj.com
Asian markets saw their initial losses deepen in midday trading Monday as investors grew skeptical following the historic downgrade of U.S. debt and moves to shore up European debt over the weekend. Gold also rose to a new nominal record near $1,700 an ounce. But 10-year U.S. Treasury yields fell in midday Asian trading despite worries that the downgrade would trim investor appetite for U.S. debt. By midday, Japan’s Nikkei Stock Average had fallen 2.1%, while Hong Kong’s Hang Seng Index was down 4.1%. Australia’s S&P/ASX 200 shed 2% to a fresh two-year low, and China’s Shanghai Composite fell 3.7%. http://online.wsj.com/article/SB10001424053111904007304576493940024485346.html?mod=WSJ_hp_LEFTTopStories

The first-ever credit downgrade of the U.S. left Wall Street and Washington struggling to come to grips with a new world order.With the U.S. stripped by Standard & Poor’s of its triple-A credit rating, big banks brought in people to staff trading desks over the weekend, and Obama administration officials put a full-court press on skittish investors. Treasury Secretary Timothy Geithner—who agreed to stay through the 2012 election—told NBC News that “S&P has shown really terrible judgment.” http://online.wsj.com/article/SB10001424053111904007304576494691613814326.html?mod=WSJ_Home_largeHeadline

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ES futures down 30 points while gold flirts with 1700. For the brave ones, buy the dip, and wait for the QE3 to be announced shortly.