Archive - Aug 17, 2011 - Story

With no major newsflow out of Europe, and no notable economic news in the US (except for PPI), we assign a probability of 99.9% to another no-volume melt up (absent news flow, because any news is bad news) as HFTs bid up every offer while collecting rebates, afterwards getting petted behind the ears for doing Brian Sack's work.

• SNB boosts steps to check franc’s rise (FT) but no peg
• The man who taught the Fed to sell Treasury puts: Markets Go From Nightmare to Bad Dream (Vincent Reinhart)
• What to make of the Franco-German Summit (FT)
• Gold Market Is a ‘Bubble Poised to Burst,’ Wells Fargo Says (Bloomberg)... but not before the bad mortgage bubble that is Wells Fargo bursts
• Putin sets sights on Eurasian economic union (FT)
• Fed’s Bullard Says New 2013 Rate Pledge Not a Signal for More Bond Buying (Bloomberg)
• Walmart warns on US weakness (FT)
• DeMark Says Stock Rally May Begin in Weeks, Buy Europe Banks (Bberg), or he could be just as wrong as last time (ZH)
• Margin Calls Push Stock Leverage Down Most in Year as S&P 500 Tumbles 12% (Bloomberg)

A snapshot of the European Morning Briefing covering Stocks, Bonds, FX, etc. Market Recaps to help improve your Trading and Global knowledge

As Zero Hedge was widely predicting (most recently here), there was no announcement of a fixed or floating peg in the CHF (which was obvious from a mile away: the desperate attempts to leak misinformation to the media and make the franc unattractive were enough to only fool various robots), and instead the SNB's now uber-powerless Philipp Hildebrand said that he "aims to expand banks’ sight deposits at the SNB further, from CHF 120 billion to CHF 200 billion." Translation: "we are terrified to do anything more, we can't afford any more balance sheet losses and for all those who called our bluff, you won" - the immediate result is a 300+ pip tumble in the EURCHF. Elsewhere - pervasive disappointment among the sellsiders who actually bought this theater hook, line and sinker: "SNB seems willing to drag feet for now before pulling trigger on FX spot intervention" Valentin Marinov, strategist at Citigroup, writes in note. Ironically the market is now falling for more of the same as it anticipates something to come out of the Swiss government to also discuss measures against the strength of the CHF. However, as Goldman says (note below) hardly anything will come out of it: "After all it is the SNB who decides on the currency regime and today's announcement is, in our view, a clear signal that the SNB first wants to see how the current measures work before they will decide on any additional measures." Prepare for another 11.5 sigma move in the USDCHF as the "priced in" central bank non-intervention unwinds.