Buy Stocks, Buy Bonds: Carry Orgy Leads To "Buy Everything" Binge Session, And Today's Compression Opportunity

Tyler Durden's picture

To think, just as stocks had started to demonstrate some semblance of normalcy we get... today. Whether it is due to some unfounded rumor that Bernanke will say something surprising tomorrow, or disclose something that he is unprepared to disclose, we are seeing another carry fueled binge resulting in a total divergence (or technically convergence) between the two traditionally inversely correlating asset classes: stocks and bonds. As the chart below demonstrates, while the two had been trending in perfect unison yesterday, today we are seeing a substantial decoupling between the 2s10s30s butterfly, which is also indicative of bidding interest focused on the 10 year, and thus is an indicator of a smoothing of the treasury curve: something traditionally associated with stock market weakness. But not today. Which is why at this point a compression trade seems warranted with an up to 40 ES equivalent point pick up.

Butterfly vs ES:

The same seen just by looking at the divergence between the 10 Year and the ES:

And the cross asset binge in which the latest reload in the USD carry trade (not the Repo-GC one: that is back to 3 bps) is once again used to literally convert USD weakness into asset class gains. Across the board. And with profit taking happening in PMs today, the bulk of free capital is fleeing into the below 3 core assets.

h/t Capital Context

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Alcoholic Native American's picture

Buy the fucken dip bitches

Cash_is_Trash's picture

The dip lies between today and tomorrow.

Come on jump from $45 to $50 by end of week.

bigelkhorn's picture

1400 On The S&P Coming? http://bit.ly/gOBvRc

better get ready for it, they will keep melting up this market until they well, dont feel like doing it any more. That time has not come yet. 

So it is up and up we go!

vote_libertarian_party's picture

Does anybody track bond volume over time?  I can see the up days for stocks = no volume but I don't know that answer for bonds.

rocker's picture

Looks like the volume is increasing on up days. Somebody is buying for the safe haven. What do they see as being unsafe.

I got stopped out of TBT and TBF today. Which shorts bonds. Looks like buying them might be smart for now.

X. Kurt OSis's picture

Bonds are a little bit more difficulty to nail down.  Primary and secondary market supply is light right now in US HG and HY corporates, but that's just end of quarter/holiday week type volume.  Supply in muni's is almost non-existent.  Up until now, supply in both HG and HY was strong versus 2008/09 lows.  Single A industrial spreads are about 20 tighter year over year and through pre-crisis tights.  There has been no volatility in cash spreads, a little sector specific CDS spread volatility and interest rates in general have moved around in a 50 basis point range across the curve but largerly a bunch of round trips.  The bond market hasn't budged since it corrected back in from the Greek thing/oil spill last year.

Pretty much a zero vol melt up in every financial asset class.

Long-John-Silver's picture

What do the insiders know, and when did they know it?

disabledvet's picture

ask "the man in charge" tomorrow at his "coming out party" and "shit."  they REALLY ARE RUNNING THE COUNTRY RIGHT NOW!

rocker's picture

As ZH has repeatedly shown us. Insiders of company stocks have been selling at about a 1000 to 1 for weeks, months, and years. This thing has to pop soon. Hedge funds game now. That includes jail bait GS.

equity_momo's picture

Just curious when were they not really running the country?

LudwigVon's picture

After AJ finished them for dinner till just before WoodyWilson...ie: not in our lifetimes!

LudwigVon's picture

It really is too bad there weren't twin mis-fires when they shot at Kennedy, coulda saved a ton of lives without the Fed...

topcallingtroll's picture

Maybe Goldilocks is back?

If true, just remember that goldilocks is the destroyer of ( precious metal) worlds.

equity_momo's picture

I love the Goldilocks meme. Its so very ironic the story involves bears. The 90s Goldilocks theory under Greenspan was the greatest bull trap ever created.

plocequ1's picture

Translated.. Buy stocks and ignore all  future futile rants

long juan silver's picture

Buy Industrial Stocks. aHHH THAT WEAK $$

ghostfaceinvestah's picture

ZIRP isn't enough.  In fact, ZIRP does more harm than good, it is actually deflationary.

Benocide needs to grow the Fed balance sheet in order to keep up this charade, or it all collapses.  Even keeping the balance sheet the same size is not enough.  Just watch.

Sudden Debt's picture

Zero rate maintained. If he does raise it to 0,25% he's still in the "save" zone, but 1% would crash it all.

I really can't see why he wouldn't keep it near zero.

 

johny2's picture

Bernanke will tomorrow remind everyone that QE to infinity is continuing. And that he backs strong dollar.

SheepDog-One's picture

China will be listening in, and commence their dumping of $2 trillion worth of dollar debt on any words like that.

johny2's picture

They can't dump it so easily. They can only complain, but they are just as guilty as FED. You really think that the QE is going to stop permanently in june?

 

Magnix's picture

No, you never know what Chinese can do. We dont trust them.

10kby2k's picture

The Fed is forcing all cash to capitulate. Money market funds have fallen $1 trillion.  Cash is a loser---buy anything. 

What a recipe for disaster----devalue dollar and keep rates at zero.

This is sooooooooooo fucked up.  Its a big game of chicken.

 

topcallingtroll's picture

Wacha gonna do? Party on I suppose.

rocker's picture

Looks like sell in May is alive. Sell positions. Hold physical PMs already purchase. Save cash for the August bottom in PMs.  Looks like wave three termination on most.  Otherwise, the BOTs will chew you up. Maybe they will let the market actually correct. 

Time to shine the Harley and Boat up. Did someone say "Party".    Yup !!!   

Yancey Ward's picture

I don't know about you, but I am off to KFC!

High Plains Drifter's picture

the bernank says,  QE 3 is on bitchez..........don't believe the hype....

SheepDog-One's picture

If he says 'unchanged', fine with me, dollar resumes its decline.

disabledvet's picture

I want "some fireworks at Eccles" tomorrow.  I want our Living Dictator to actually "dictate" a little.  Some "slip of the tongue" along the lines of "I do love it so" (while looking into outer space...and "to the left") or "President Hu?" or something.  Also "not all stocks are partying today"--a few in fact are getting crushed.  "I feel your tears."

cnbcsucks's picture

Correct - In fact, most of what moved the S&P today was the action in 5 of the top 20 stocks. 

 

Quack41's picture

Someone knows something-- and it ain't me. when things do n't behave normally it's time to square up ....

Josh Randall's picture

10-4, Roger that, etc...the fix is in (not that it never isn't) but this thing is behaving like a Spam Burrito in a baby's belly, this market is all over the place and going to explode itself and smell bad when it does. But you can d@mn well bet Insiders are playing their part and doing what they're told 

SheepDog-One's picture

When everyone is in total agreement about what will obviously happen next, I cash in and step away from the table. Good luck from here on out, youll need it.

firstdivision's picture

market going nuts in AH here.

SheepDog-One's picture

Dollar goin nuts....73.7. All I need to know.

Racer's picture

In the last couple of weeks the only time the market 'really' moved was in out of hours

SheepDog-One's picture

Racer...the entire market move since DOW 6,500 has been done AFTER HOURS!

Racer's picture

Very true, but they did some big jumps recently having sucked some more shorts back in again with fake resistance levels

bulbar's picture

Hey ZH morons...how does it feel to be right yet wrong all at the same time?  I've owned this market all the way up while you've been just whining away.  It may all fall apart some day but at least I'll have more to live off of than you will.  If you can't beat 'em, join 'em.  Don't fight the Fed.  Yeeehaaaaw

SheepDog-One's picture

Better hope your stocks keep going up just to stay even with the collapsing dollar dumbass.

bulbar's picture

Whoze the dumbazz here?  I'm up 30%.  How bout you fool?  Yeeehaaaw

SheepDog-One's picture

30%? Moron Ive done over 400% in the last 2 years, take your BS 30% chump change and Cramerhole that shit.

bulbar's picture

Woops I meant 3000%.  Yeeehaaaw

css1971's picture

30% is nothing to be proud of in this market.

Sudden Debt's picture

I'm up 112% in the last 8 months on my investments. None of them in stocks.

How many stocks do you know that do that?

 

digalert's picture

Whoze the dumbazz here?  I'm up 30%

Woops I meant 3000%.  Yeeehaaaw

A dyslexic moron is outed...troll

mayhem_korner's picture

I'm up 30%.

I hear that a lot at casinos.  Doesn't count until you walk away.

BTW, my 7-year-old found a 1961 quarter in late Feb.  The melt value's up 40% since she found it. 

What we're really interested in is your plan when you cash out of your huge (sic) gains.  Do tell...

Hephasteus's picture

My friend started converting his 1967 camaro to a pro-street rod.

Good job, wife good job. Started throwing papers for extra cash.

About 25 grand into it started gambling some.

We won 90 bucks. How much did you lose. 120 bucks. So you lost 30 bucks. Ya but we won 90 bucks.

Wife gets tired of all the work wants to quit the extra route work. Marriage starts getting rocky. He's still pumping a couple grand a month into it and working on it 20 hours a week as it's all falling apart.

This is america. They want all these expensive military projects these expensive computer projects even though they don't fund themselves pay for themselves or give you any benefit.

You got ISP's and cable companies trying to charge amercians outrageous prices for tv and internet. Things get tight. People start dumping extra channels extra packages super fast internet. Revenues plunge. Then it comes down to what people want. People just want basic tv and internet and they try to jack it up to super high speed internet price with the 158 channels. Hollywood owns all our cable tv and cable internet companies. They keep trying to come up with 300 million bucks to pay some fucktard actor or actress when it's not there. Then it becomes a pimp NO JOHN war. They stop acting like they pimping for people that are using the service and start trying to make people who just want to check email browse internet come up with 65 million bucks to pay some stupid ass fucking disgusting kim cardashian to do a shitty ass reality tv show that 12 people watch.

Cramazon is the cloud pimp. The idea is your hard drive can show data on you computer for 65 bucks flat and no month fee and lasts for 3 to 12 years generally. But with cloud you store everyting and have to pump it through the communications systems that HOLLYWOOD owns. If they can get people to give up their local storage and start demanding the 10 mb/sec internet instead of being happy as shit with the 3mb or 2 mb internet then can replace a 60 dollar hard drive sale with a 60 dollar a MONTH rental fee in the form of ISP charges and then tack on more fees for tech supporting it when it stops fucking working.

They want to get control of everything you want or need or use. And blackmail the shit out of you with higher and higher prices.

It won't be long until they invent cloud refrigerators and start charging you 5 bucks to pull the food you bought out of the cloud fucking refrigerator just so you can cook dinner.

These are all 2nd house/8th house issues. Your resources versus someone elses resources. Under a guise of having a bunch of servants make your life easier they think they can create a world where you have a bunch of masters blackmailing you constantly pretending to be servants. Then you LOSE all control over who gets rewarded and who gets punished. They've already taken punishment COMPLETELY out of your hands through the courts and cops and soldiers. Now they want to take REWARD completely out of your hands and make you reward people that you may not like, may not respect and may wish were fucking dead. At the very least you will just want them to shut the fuck up but that won't happen because thier PIMPS will be splashing them all over the place.

It's fucking tough if broke ass credit fucks were responsible for stupid ass sports stars and  hollywood cunts paychecks. But when they start trying trying to make poorer and poorer segments of society pay for it things are going to get ugly.

If people do not hack slash and fucking burn hollywood completely out of the internet and data communications they will have the most gawd awful piece of shit system you an imagine. You want to fix charlie sheens coke addiction and stupid attention whoring and tv and internet rants. STOP FUCKING LETTING HOLLYWOOD handle yo fucking IT.

Fuck your taxes.

Fuck your cloud.

Fuck your centralization.

Fuck your amazon.