Business

Amid last Thursday's cataclysmically illiquid flash-crash like collapse in Treasury yields, speculators in extreme net short positions reached for anything to hedge their positions. Most remarkably, call-buying (i.e. betting on / hedging lower yields) relative to put-buying exploded to a record skew. It would appear that the utter panic protection positioning is being unwound in the last few days and that has dragged yields considerably higher.

In the new bifurcated normal US economy, with the manufacturing sector unofficially in recession, it has been the growth of the services sector, and, as we detailed here, implicitly the surge in "bartenders & waiters" jobs, has saved the government's "recovery" statistics in the last few years. Given the recent performance of the National Retail Association's Restaurant Performance Index, the jobs recovery 'party' just ended.

Since December 2007, it is clear where the jobs gains have been...

Over the years, Hayman Capital's Kyle Bass has gotten heat for his trade recommendations, with "virtual portfolio" pundits accusing the Texan of being a "one-hit wonder" ever since his subprime trade, with little else to show for his repurtation.

That is no longer the case: after making a strong case over the past 3 months that Texas-based REIT United Development Funding IV is nothing but a Ponzi scheme - a name he has been short -  the stock tumbled, jumped, and then tumbled again.

Three days ago, we reported that just days after Goldman's technical team told clients that Gold May Soar "Much Higher Over Time", Goldman's head of commodities released a note, titled appropriately enough "Nothing to Fear but Fear Itself", urging clients to short gold

In a section, titled "time to sell the fear barometer, Currie said the following:

It's definitely different this time...

The 2008 analog lines the current trajectory up with August 2008 right after Treasury Secretary Paulson told the world reassuringly that:

"Our economy has got very strong long-term fundamentals. And you know, your policy-makers and regulators here - we're very vigilant."

And we all know what happened next...

h/t @ChrisBrady12

Could never happen again?

Yeah you're probably right...