POWERSHARES QQQ TRUST SENIOR 1 ETF (QQQQ) 43.44 -$0.22 (-0.50%) 03:09AM (15 mins delay)

Friday was a frightening day for stocks as the exuberance seen on Thursday following the GDP report evaporated following a weak US consumer sentiment reading and amid CIT bankruptcy fears. The Dow experienced its largest one-day fall (-2.5%) since late April, while the S&P and Nadsaq also shed more than 2.5%. Leading the decline were financials. Weighing on sentiment was also investor Wilbur Ross’ warning that a “huge crash in commercial real estate” was beginning and comments from analyst, Michael Mayo, that Citigroup (C) may have a $10 billion writedown of deferred tax assets in Q4. Volatility has resurfaced, rising back to early July levels,and now hovers above 30. Other markets followed in due course with risky currencies selling off, driving gains in the dollar and yen. The NZD, CAD, SEK, AUD and BRL all fell in excess of 1.5% for the session as the USD rallied.

The data Friday showed that US consumer spending fell 0.5% month-over-month in September, the largest drop since December, after a 1.4% increase in August. The decoupling between US consumer spending and the manufacturing PMI is startling. Of particular interest this week will be US consumer credit and Non Farm Payrolls. Consumer credit has been falling for seven months in a row (i.e. redemptions have outpaced new lending).