This page has been archived and commenting is disabled.

Liquidity Situation Getting Worse As Relentless TED Spread Marches Ever Wider

Tyler Durden's picture




 

Equities now officially have an active memory of about 24 hours. The biggest market drop in history is now long forgotten, and the only consolation to investors is that SEC is actively fixing the problem even though it has no idea what the problem is. Overnight, futures went up by 20 handles in the span of 4 hours as the invisible bid appeared yet again, afraid of what would happen if the immediate drop in ES was not breached. Luckily, funding markets are not nearly as stupid as stocks, and as a result the TED spread has yet to show any signs of moderating. At last check 3 month LIBOR was 0.4302%, the highest it has been since Q3 2009, and certainly a change from the funding market calm that had enveloped all market participants like Federal Reserve "no risk" amniotic sack over the past year. At the same time the 3 Month Bill is once again grinding tighter, as investors unsure what to buy, buy everything: stocks, bonds, oil and especially gold. Another perfectly insane day in US capital markets glutted by endless liquidity.

TED Spread below:

TED detail:

And a slightly less cynical perspective on capital markets from Contrary Investor:

"The scabs formed over the psychological and financial wounds of the 2007-early 2009 period have been ripped wide open once again.  The chances for credit contagion are real.  We already know the solutions of the ECB, the Fed, etc. will be more borrowing and more printing of money.  At some point the law of diminishing psychological returns will set in.  As mentioned, at some juncture we expect a tipping point where markets perceive further bailouts as destructive, as opposed to supportive of asset prices.  The global central bankers are now clearly slaves to asset prices.  There is no other politically acceptable alternative.  We need to take it all one step at a time as the chances for market intervention, whether overt or covert, are running very high in many an asset class. "

Our advice is as it has been since May of 2009: stay out of the markets except for gold. Gold is safe, as it is a direct bet on the stupidiy of our politicians and the lunacy of our money printers... which lately just happen to be one and the same thing.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 05/12/2010 - 09:59 | 345957 Hughe Crapper
Hughe Crapper's picture

Something is throbbing here. ;)

Wed, 05/12/2010 - 10:02 | 345971 Whizbang
Whizbang's picture

"the law of diminishing psychological returns" Hah! Europe and the IMF just promised to monetize over a trillion dollars of bad paper on demand. Now that all those banks have gotten a wink and a nod, they are going to dive head first into high beta investments. Why not? They are all now too big to fail. Quants Unite! Get ready for another month long rocket shot in equities. Too bad the people of the u.s. are too busy working sixty hours a week in unpaid overtime and dry humping their credit cards or they might give a shit that through the fed, they are being taxed into oblivion.

Wed, 05/12/2010 - 10:55 | 346157 SteveNYC
SteveNYC's picture

Damn good call.

Wed, 05/12/2010 - 11:12 | 346224 Whizbang
Whizbang's picture

why thank you for the compliment. I went long this week with no hedges. We'll see if I lose my face, or if I clean up.

Wed, 05/12/2010 - 11:14 | 346231 ghostfaceinvestah
ghostfaceinvestah's picture

Agreed, good call.  Meanwhile the deflationists will sit on their hoards of fiatcos, waiting for a collapse that will never come.

Wed, 05/12/2010 - 10:07 | 345972 Divided States ...
Divided States of America's picture

Another huge tankage will happen eventually, I am going to set up a program that will place BUY orders on the most liquid blue chip stocks with a 39% discount to the previous day's closing price everyday. If the markets tank like last thursday, I will get filled and my trade will not be reversed.

Wed, 05/12/2010 - 11:28 | 346259 Monday1929
Monday1929's picture

Ben, I don't think you were supposed to tell us your plan.

Wed, 05/12/2010 - 13:17 | 346626 rmsnickers
rmsnickers's picture

I assume this is sarcasm as setting up those orders is not possible?

Wed, 05/12/2010 - 10:08 | 345983 Cursive
Cursive's picture

Equities now officially have an active memory of about 24 hours. 

I honestly thought Harry Wanger would make a reappearance before SPX 950 and his final curtain call.

Wed, 05/12/2010 - 10:09 | 345986 Rider
Rider's picture

He will be here as soon as the melt up resumes, that's for sure...

Don't miss him too much.

Wed, 05/12/2010 - 10:26 | 346051 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Oh I know, I ma actually going thru a bit of HW withdrawal. He just cracks me up. You gotta love him. He can't be serious. If he is, he's even funnier.

Wed, 05/12/2010 - 10:09 | 345988 Abundance
Abundance's picture

10 AM, the machines went into overdrive upward.

Wed, 05/12/2010 - 10:26 | 346052 Missing_Link
Missing_Link's picture

HA!  I knew you'd come back.

Less than a week after being proven totally, utterly wrong on every single prediction you made as the market tore straight through all the resistance you promised was in place, you're back with still more ludicrous perma-bullish BS.

Begone, you horrible troll!

Wed, 05/12/2010 - 12:19 | 346397 Cursive
Cursive's picture

I particularly loved the comment about no 5% corrections until new all-time highs.  HW's reaapearance give me even more confidence that we'll see SPX 950 by late Summer.

Wed, 05/12/2010 - 10:27 | 346058 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

HW I missed you. Really. Gawd you must drink even more than I do.

 

Only 2 Junks on HW so far? Must be a slow day on ZH. LOL

Wed, 05/12/2010 - 10:41 | 346116 asteroids
asteroids's picture

Gosh Harry, you sound a lot like Cramer. One wonders.....

Wed, 05/12/2010 - 10:48 | 346140 jdrose1985
jdrose1985's picture

we'll be staring at 1200 as the economic numbers continue to show impressive growth in the US.

Can you put a positive spin on this TED spread number for us, dingleBarry Hanger?

 

Wed, 05/12/2010 - 10:58 | 346169 HarryWanger
HarryWanger's picture

As usual, we see a small slice of this chart. Remember in 11/08 when the spreads were insane? This isn't even remotely close. Yes, it's risen a bit in the past week but nothing close to where we were during the crisis. Let's get some perspective here.

Wed, 05/12/2010 - 11:03 | 346188 Al Huxley
Al Huxley's picture

You might want to wait until it breaks at least 1200 before you say 'correction is over' Harry.  I'm betting S&P more likely to get stuck here at around 1170 and then take another trip back to 1050 before you get any chance of another upleg.

Wed, 05/12/2010 - 12:34 | 346451 Missing_Link
Missing_Link's picture

Harry:

You.  Have.  No.  Credibility.

Wed, 05/12/2010 - 13:02 | 346560 earnyermoney
earnyermoney's picture

Care to update your Deep Horizon prediction?

Wed, 05/12/2010 - 14:57 | 347102 homersimpson
homersimpson's picture

Every time I read his posts, I can't help but think of Stevie Wonder driving on the freeway. He'll hit the guard rails plenty of times to survive, but sooner or later he'll be driving off a cliff. Oh well. Over under is about 1 year.

Wed, 05/12/2010 - 11:34 | 346271 geminiRX
geminiRX's picture

The housing bubble in Canada is slowly unwinding. Listings way up and across the board price reductions in my expensive city. Tax increases, stricter mortgage rules, and a tapped out consumer are rapidly deflating the housing bubble. Your theory Harry is garbage...

Wed, 05/12/2010 - 12:31 | 346437 zero intelligence
zero intelligence's picture

The return of the Hairy Whanger.

Wed, 05/12/2010 - 10:15 | 346006 mdtrader
mdtrader's picture

EURUSD parity = 1550 on Nasdaq 100 for me, but of course nobody cares.

Wed, 05/12/2010 - 10:19 | 346027 williambanzai7
williambanzai7's picture

Bananas have a half life of...

Wed, 05/12/2010 - 10:32 | 346071 john_connor
john_connor's picture

A warning to politicians who distort and "attack" the market: Your countries AND central banks can and will go bankrupt.

Yeah I'm talking to you Sarkozy

Wed, 05/12/2010 - 10:38 | 346098 RobotTrader
RobotTrader's picture

Meanwhile, the apartment REITs continue their relentless meltup.

Totally unfazed by last week's "convulsion"...

LOL...

And WaMu and Wachovia - infested garbage banks are making new 52-wk. highs...

Wed, 05/12/2010 - 10:41 | 346115 Turd Ferguson
Turd Ferguson's picture

MacDaddy!!!

Wed, 05/12/2010 - 11:02 | 346186 Sudden Debt
Sudden Debt's picture

but didn't they say everything was getting better mommy?

Need milk to get over this trauma of lies....

Wed, 05/12/2010 - 11:04 | 346193 Al Huxley
Al Huxley's picture

Good thing - we need these melt-ups to keep the good pics coming.

Wed, 05/12/2010 - 10:44 | 346124 mdtrader
mdtrader's picture

Who's up for another 1000 point gap lower on the Dow on a break of 1.25 on EURUSD?

Wed, 05/12/2010 - 10:51 | 346136 plocequ1
plocequ1's picture

See, That wasn't so hard.Alls that is needed is A Dell, A printer and some World Market software designed by Bernie Madoff ( Only availaible to the Fed) and hense Dow 90,000.

Wed, 05/12/2010 - 10:56 | 346166 RobotTrader
RobotTrader's picture

Heh, while Europe implodes and spreads are blowing out, money managers are ignoring the "spasms" and are buying Lululemon with a P/E of over 50...

LOL....

Cannot underestimate the fever inside the Riverboat casino...

Wed, 05/12/2010 - 11:09 | 346210 mdtrader
mdtrader's picture

Mr T has just spotted a Lululemon customer & shareholder!

http://www.youtube.com/watch?v=OkT_d2OTgv0

Wed, 05/12/2010 - 12:43 | 346479 SheepDog-One
SheepDog-One's picture

WOW I got to get in on this Lululemon bubblemania! What do they make anyway, hulahoops? I dont care, bubble me up Scottytrade!!!

Wed, 05/12/2010 - 10:59 | 346174 Nothingman
Nothingman's picture

Gold just broke 1240... silver approaching 20.

Wed, 05/12/2010 - 11:10 | 346217 John McCloy
John McCloy's picture

 It is a complete volumless melt up in the markets on a scale I cannot remember seeing. This is insanity it feels like hyperinflation

Wed, 05/12/2010 - 11:12 | 346225 mdtrader
mdtrader's picture

It will disappear even faster when the euro breaks down.

Wed, 05/12/2010 - 12:29 | 346433 SheepDog-One
SheepDog-One's picture

'WHEN' the Euro breaks down? It just did another shit the bed today, every Euro gap up on open gets immediately shorted by the French bankers. Never give the French any help, ever.

Wed, 05/12/2010 - 12:48 | 346494 SheepDog-One
SheepDog-One's picture

Insanity, bubbling up the junk on no volume as 4 stocks account for 100 DOW points, based upon (according to a cokehead on CNBS) 'debt fears have eased'. Wow I watched that movie Idiocracy and thought it was spot-on, only thing is it was supposed to take place hundreds of years in the future!

Wed, 05/12/2010 - 11:11 | 346222 RobotTrader
RobotTrader's picture

Transports going vertical....

Wed, 05/12/2010 - 11:17 | 346237 mdtrader
mdtrader's picture

Oil says no no no. What about the Chinese bear market!

Wed, 05/12/2010 - 11:19 | 346240 mdtrader
mdtrader's picture

Euro says no no no. Kiss your equity gains goodbye suckers.

Wed, 05/12/2010 - 11:34 | 346263 Racer
Racer's picture

I have just spend a many hours on a UK red tape nightmare. I have to fill in forms and have to do some measurements. The instructions are very difficult to understand, so I contact the help line. I speak to 3 different people who give me 3 different views on it and I am still not sure as even one of the people said it wasn't clear and she didn't understand it. The total amount of money involved in this... to save the UK government about £1.60. They have had to employ those  people and they phoned me back, so add other costs to that too. I have taken up about 2 or 3 hours this week at least trying to get it sorted out!!!!!! Last year I tried to sort it out, and got different views to current 3 people. Talk about using a giant building destroying machine to crack open a peanut shell

No wonder the country is in such a state.

Wed, 05/12/2010 - 11:46 | 346302 Crab Cake
Crab Cake's picture

Loans, guarantees, money printing, and accounting fraud are easy.

Cash flow is a bitch.

Truth is the daughter of Time.

Wed, 05/12/2010 - 11:50 | 346312 mephisto
mephisto's picture

Every asset class but equities seems to be scared. Every equity investor seems to think he owns the quality stocks that will survive this mess. HFT "traders" can move the market 10% in 5 seconds by switching their machines OFF. 

I want 3 hats:

Gold 10k hat.

Dow 10k hat.

VIX 10k hat.

 

Wed, 05/12/2010 - 11:57 | 346331 jkruffin
jkruffin's picture

Euro rolling over again almost back to 1.25 already

GOLD and SILVER all day, everyday.

Wed, 05/12/2010 - 11:59 | 346336 economists_do_i...
economists_do_it_with_models's picture

Forgive me for not being an expert, but the $TED chart used to be 1.00+ for over a year.

It's currently 0.276.

How on *earth* is that "high" ???

It's about 1/4 of what it used to be.

I know the trend is higher and it crossed the 200MA, but is still only 1/4 of what it once was.

Wed, 05/12/2010 - 12:01 | 346345 SWRichmond
SWRichmond's picture

At some point the law of diminishing psychological returns will set in.

We're already there IMO.  Euro collapse, gold up.  Reinflation, gold up.  Dollar down, gold up.  Dollar up, gold up.  Healthy skepticism reigns.

This is far from over.  The dot gov / CB market manipulators will not go softly.  Holding here with strong hands.

Wed, 05/12/2010 - 12:06 | 346349 Crab Cake
Crab Cake's picture

We're already there IMO.

I suppose that depends on your definition.  I define the law of diminishing psychological returns as...  Why go to work?  For fiat dollars? What's the point? 

When that psychological barrier is breached, and it's coming, it doesn't matter what the CB's/market manipulators do or how they go; game over.

Wed, 05/12/2010 - 12:32 | 346441 Gordon_Gekko
Gordon_Gekko's picture

"XYZ Nonsense", Gold up.

Wed, 05/12/2010 - 12:08 | 346362 mdtrader
mdtrader's picture

What part of massive haircut to euro & sterling revenues for big US multi-nationals does Wall Street not understand?

Wed, 05/12/2010 - 12:16 | 346368 Comrade de Chaos
Comrade de Chaos's picture

Well,  with the start of the Chinese bear market, smart money being net short and EU bluff I am about to wake the inner bear in myself. Going 70% cash, 30% long term puts on the World markets (10% allocated  every month.) I smell fear and blood in the air, it's about time to get bold.

p.s And no, if you are getting attached to your investments, wouldn't suggest trying it @ home kids. (same goes with "trading" on your 401K accounts.)

 

Defaultous byaches !

Wed, 05/12/2010 - 12:14 | 346371 jkruffin
jkruffin's picture

Debt Woes!  beautiful chart here to explain it all

 

http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html?...

 

So when Spain and Italy fail,  add another 2.5 Trillion fiats for Bennie to print

Wed, 05/12/2010 - 12:14 | 346384 Dr Hackenbush
Dr Hackenbush's picture

Randolf and Mortimer Buffet had the 'erroneous ruling policy' enacted and the "machines were turned back on."  The ending of the movie has changed.  The 'jab' below the major trend never really happened and Billy Ray is back on the streets. 

 

Wed, 05/12/2010 - 12:27 | 346425 Gordon_Gekko
Gordon_Gekko's picture

as investors unsure what to buy, buy everything: stocks, bonds, oil and especially gold. 

Guess which asset class will survive the financial armageddon. And where the f**k is the dollar? I thought the dollar was supposed to be the "safe haven" - LOL! At this point any human with an IQ not zero is buying Gold.

Wed, 05/12/2010 - 12:31 | 346436 Gordon_Gekko
Gordon_Gekko's picture

Our advice is as it has been since May of 2009: stay out of the markets except for gold. Gold is safe, as it is a direct bet on the stupidiy of our politicians and the lunacy of our money printers... which lately just happen to be one and the same thing.

And only the physical variety, I might add.

Wed, 05/12/2010 - 12:33 | 346446 zero intelligence
zero intelligence's picture

People bash TD and others for being bearish on the market, like they missed some kind of party, but if you went long gold in May 2009 you would now be outperforming the S&P 500. You have to choose which party you want to go to.

 

Gold is the better party.

Wed, 05/12/2010 - 12:38 | 346465 SheepDog-One
SheepDog-One's picture

The easiest thing to pump for show now is zero volume 'US stock market equities' which is in itself a joke since its almost impossible to find anything 'US' in 'our markets' since everything is made overseas, only thing here is an office building with Press Release email computer.

So while Europe, the Euro, bonds etc implode, the avg dumbass Idiocracy american is mezmerized by a 'green stawk market'. Really its hillarious to me. $500 gold loaded ages ago and sitting back watching the world die and imagining the FED boyz work frantically around the clock in their race to nowhere. Hey whatever.

Wed, 05/12/2010 - 13:18 | 346640 Gordon_Gekko
Gordon_Gekko's picture

Right on.

+1 million

Wed, 05/12/2010 - 17:32 | 347421 pokeemon
pokeemon's picture

One correction

What is shown on the charts is the LIBOR/OIS spread (spread between the 3 month LIBOR rate & the 3 month OIS), not the TED spread (spread between the 3 month LIBOR rate & the 3 month T-Bill).

Do NOT follow this link or you will be banned from the site!