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Treasury And Market Responses To S&P Stunner

Tyler Durden's picture




 

The Treasury's prepared statement is out 25 minutes following the S&P planned downgrade, which only those who don't get inside information were surprised by.

  • US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges
  • Both political parties now agree it is time to begin bringing down deficits as a share of GDP.
  • US economy is strengthening as it emerges from recent recession.

And the followign market responses from market participants via Reuters:

 "What the agencies want to see is real steps taken to improve the situation. in the absence of that a downgrade is not far.

"What then Obama administration has done in cutting the 2012 budget recently is to show that he is willing to engage. The ratings agencies have to take that as a positive, but they want to see more.

"Our call is for the 10-year yield to go to 4 percent by the end of the year on inflation and growth alone. That does not even account for issues surrounding the debt. Today may be the first day that the bond market starts to price in these budget issues." JOHN BRADY, SENIOR VICE PRESIDENT, MF GLOBAL, CHICAGO

"It's not an issue that is going to affect us today or tomorrow but the fact of the matter is, is room going to be made or not to get the fiscal house at least in some order during debt ceiling negotiations?

"This is tape bomb. It doesn't come as a complete surprise to the markets however seeing it in black and white print it is going to shake the market up for sure. You see the dollar down a bit, gold getting bid...and a break of 1298 on the S&P could send it to 1285 in the course of the week." HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NEW YORK

"The simple thing to say is this is a big surprise. We've all known that credit conditions in the U.S. are borderline at best. The numbers compare with some of the more troubled countries in Europe -- if you look at deficit as a percentage of GDP or debt as a percentage of GDP. So we know that they are borderline but we didn't expect S&P would take this action, at least I didn't. It is going to put a lot of pressure on the Obama administration to move faster at reducing the deficits, or cutting spending and possibly increasing taxes. So it will put pressure on the Republicans as well. There will be pressure on Washington. It is not good news and it is not good news because to move towards austerity when the U.S. economy is not on sound footing is not a good idea. This comes incidentally right after the IMF has downgraded its view of the global economy. So it is likely to stir those worries or concerns about global growth. Not good news.

"They have good reason to be skeptical or worried. So this is going to put pressure on policy makers -- democrats and republicans alike -- to get their act together. And I'm not sure the timing of getting their act together is that good. And again, It is that idea of austerity before the economy is on sound footing." DOMINICK CHIRICHELLA, SENIOR PARTNER, ENERGY MANAGEMENT INSTITUTE, NEW YORK;

"We came in today with not a whole not new over the weekend. The geopolitical risk was stable with Nigerian elections coming in O.K. So what we're seeing is a continuation of the downward correction that started last week but paused midweek because of the inventory numbers.

"We will check the $107 a barrel technical support level today and if the momentum continues on the equities side, we will hit $103 a barrel soon." LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO

"The rating is the same, but the headline has enough of a shock value. The initial reaction is that this is negative for dollar assets across the board." CHRIS DILLMAN, ANALYST, TRADITION ENERGY, CONNECTICUT

 

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Mon, 04/18/2011 - 09:32 | 1179974 Racer
Racer's picture

'Sub-prime is well contained'

Mon, 04/18/2011 - 09:44 | 1180052 long juan silver
long juan silver's picture

Compared to an hour ago or 4 years ago?

Mon, 04/18/2011 - 09:46 | 1180080 Cleanclog
Cleanclog's picture

And Finland now controls (at least strongly influences) the EU bailout fall apart.  Greece to 25% and Portugal to 15% as US Treasuries become junk and endowments take their gold physical.  It's a brave new world . . . 1984.

Mon, 04/18/2011 - 09:32 | 1179984 TruthInSunshine
TruthInSunshine's picture

 ***BREAKING NEWS ALERT***

 

Fitch downgrades Ancient Rome to BBB- from BBB

 

***THIS HAS BEEN A BREAKING NEWS ALERT***

Mon, 04/18/2011 - 09:46 | 1180067 long juan silver
long juan silver's picture

I am shockedShocked at this outrage!

Mon, 04/18/2011 - 09:45 | 1180075 tom a taxpayer
tom a taxpayer's picture

Was that a downgrade or just a credit watch for Ancient Rome?

Mon, 04/18/2011 - 09:50 | 1180095 Cursive
Cursive's picture

@TruthInSunshine

Lulz. Very appropriate. The quote from Chirichilla is an eye popper of stupidity. "We knew it was borderline...but we didn't expect...". Dumbasses all around.

Mon, 04/18/2011 - 11:42 | 1180616 TruthInSunshine
TruthInSunshine's picture
Fisher just basically stated Bernanke perjured himself (which we all knew, anyways). LULZ. Epic.
Mon, 04/18/2011 - 09:36 | 1179996 WALLST8MY8BALL
WALLST8MY8BALL's picture

We will continue to front run POMO and take the 3% layup

Mon, 04/18/2011 - 09:34 | 1179997 ivars
ivars's picture

Welcome Your next president:

http://www.youtube.com/watch?v=C5cZWRx_AMs

Mon, 04/18/2011 - 09:44 | 1180058 alpha60
alpha60's picture

post-david lee roth VH entrance music... dooood.

Mon, 04/18/2011 - 09:56 | 1180117 Spastica Rex
Spastica Rex's picture

PERFECT music for SP!

Mon, 04/18/2011 - 10:59 | 1180425 eatthebanksters
eatthebanksters's picture

Sammy Hagar blow David Lee away!

Mon, 04/18/2011 - 10:00 | 1180004 Mentaliusanything
Mentaliusanything's picture

Cliff diving is dangerous to your wealth

Is that the smell of fear ?

No that's the S&P losing its bowels

Could somone ring Yahoo its fallen off the page

 

Mon, 04/18/2011 - 09:37 | 1180005 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Treasury:

 

Walks to podium, clears throat:

 

DU'OH!!!

Mon, 04/18/2011 - 09:37 | 1180017 Cleanclog
Cleanclog's picture

Take your gold and silver physical. US downgrade not a surprise really, just get out of paper.  Paper debt (US Treasuries), US dollars, US munis etc etc etc

Mon, 04/18/2011 - 09:37 | 1180018 oogs66
oogs66's picture

The treasury says S&P underestimates the possibility of government reaching budget conclusion? OMG! LOL!!! ROFL!!!  S&P overstates the possibility of doing anything.  Its all been lies.  They lied about the cuts - $38 billion --> less than $1 billion actual.  Compromise in December - spending up and taxes down!  Neither current plan calls for surplus, just less deficitis!   S&P looked at the numbers like ZH (about 2 years later) and just said what is common sense.   But since the market still, god knows why, places faith in S&P, its meaningful.

Mon, 04/18/2011 - 09:39 | 1180027 Boilermaker
Boilermaker's picture

What time is the retarded reversal back to parity in the markets?

I want to sell my puts prior to the ramrodding.

Mon, 04/18/2011 - 09:42 | 1180037 magpie
magpie's picture

Kiwi in the Coalmine ?

http://www.reuters.com/article/2011/04/18/china-newzealand-swaps-idUSL3E...

(Reuters) - China and New Zealand have signed a 25 billion yuan ($3,83 billion) bilateral currency swap deal, the Chinese central bank said on Monday.

Mon, 04/18/2011 - 10:19 | 1180237 Mentaliusanything
Mentaliusanything's picture

That sum would buy a fair chunk of those lovely Islands.

Mon, 04/18/2011 - 09:43 | 1180045 Blotsky
Blotsky's picture

It is going to put a lot of pressure on the Obama administration to move faster at reducing the deficits, or cutting spending and possibly increasing taxes.

Double speak for Austerity

Mon, 04/18/2011 - 09:41 | 1180051 eigenvalue
eigenvalue's picture

Has anybody noticed today's GOFO and SOFO? GOFO rates have reached the lowest level since the beginning of this year!Another short squeeze seems to be on its way. 

Mon, 04/18/2011 - 09:44 | 1180054 kalum
kalum's picture

Who is John Galt?

Mon, 04/18/2011 - 09:59 | 1180139 andybev01
andybev01's picture

A highly fictionalized character who is based upon an un-attainable ideal, in a fantasy novel written by a jaded, amoral hypocrite.

That is who John Galt is.

Mon, 04/18/2011 - 10:07 | 1180181 tmosley
tmosley's picture

Sounds like somebody didn't get their welfare check on time.

Mon, 04/18/2011 - 09:44 | 1180056 vote_libertaria...
vote_libertarian_party's picture

"4% 10 year by the end of the year"

 

hahahhahaaa....you'll be lucky if it is under 4% at the end of the day.

Mon, 04/18/2011 - 09:45 | 1180060 Bob
Bob's picture

Looks like the pigmen are pushing the Austerity for Commoners agenda.  No surprise here . . . the stakes have become sufficiently extreme for them to start pulling out all the stops. 

Look at silver going vertical!

Mon, 04/18/2011 - 09:44 | 1180072 Henry Chinaski
Henry Chinaski's picture

BTFD this morning.  Markets will be green before lunchtime.

Mon, 04/18/2011 - 09:52 | 1180112 Sudden Debt
Sudden Debt's picture

and stay green untill Christmass 2020 :)

 

Mon, 04/18/2011 - 09:45 | 1180074 bob_dabolina
bob_dabolina's picture

Surprise? What surprise?

$14 Trillion national debt

$113 Trillion in unfunded liabilities

and 50% of Americans don't pay income tax.

Like I said...what surprise? Were people hoping for an upgrade?

Mon, 04/18/2011 - 10:02 | 1180151 Sudden Debt
Sudden Debt's picture

You forgot to mention:

- 1.5 Trillion yearly deficits for decades to come

- Morons who have the funniest commercials get to be President

 

But yes... AT LEAST IT'S STILL BETTER THAN ZIMBABWE!!

 

for now...

 

Mon, 04/18/2011 - 09:46 | 1180081 writingsonthewall
writingsonthewall's picture

I'm so glad I'm on this site and not on some wanky CNBC securities show.

Where is Kramer? - is he going mental yet?

 

"This is tape bomb. It doesn't come as a complete surprise to the markets however seeing it in black and white print it is going to shake the market up for sure."

 

yeah right you total turd - don't worry about the brown stuff leaking out the back of your trousers - that's "all natural" - I'm sure you were all prepared for it...

Mon, 04/18/2011 - 09:49 | 1180087 treemagnet
treemagnet's picture

Bet is closes green anyway.....didn't Tyler have a thought or nine about the Fed buying directly sans POMO?

Mon, 04/18/2011 - 09:50 | 1180092 tslv50
tslv50's picture

Why is it that only idiots get elected? Idiot, you elected them! 

Mon, 04/18/2011 - 09:49 | 1180096 Jason T
Jason T's picture

1285!! oh noooo!!! 

 

Mon, 04/18/2011 - 09:53 | 1180113 treemagnet
treemagnet's picture

remember grasshoppa - free fall of 1000 point begin with drop of 20  (ancient chinese saying)

Mon, 04/18/2011 - 09:52 | 1180104 firstdivision
firstdivision's picture

If your balls drop 10 years too late, does it really make a difference?

Mon, 04/18/2011 - 09:52 | 1180110 Miss Expectations
Miss Expectations's picture

I've found a whole bunch of black and white Johnson's

http://www.greerspier.com/images/15hp.jpg

Mon, 04/18/2011 - 09:57 | 1180123 BrobamaReds
BrobamaReds's picture

****BREAKING NEWS****

April is the New May - Sell in April and go away.

White House blames El Nino for the misunderstanding.

10:00AM S&P ALGOS kick in.

Global mrkts RIP.

 

Mon, 04/18/2011 - 09:58 | 1180127 curbyourrisk
curbyourrisk's picture

Woo-Hoo....let the fun begin!!!!!!!!!!!!!!!!!!111

Mon, 04/18/2011 - 10:04 | 1180165 Sudden Debt
Sudden Debt's picture

Looks like "somebody" is going to buy some 2 year bonds....

 

3 Month      0.05%      +0.01 (25.00%)

6 Month      0.10%        0.00 (0.00%)

2 Year         0.66%      -0.02 (-2.94%)

5 Year         2.10%      +0.01 (0.48%)

10 Year       3.43%      +0.05 (1.48%)

30 Year       4.51%      +0.08 (1.81%

Mon, 04/18/2011 - 10:04 | 1180171 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

VIX IS ALIVE!

Mon, 04/18/2011 - 10:40 | 1180330 treemagnet
treemagnet's picture

please don't tease me.....its still monday.

Mon, 04/18/2011 - 10:04 | 1180172 r101958
r101958's picture

Just another entry in a lengthening list of manipulations.

Mon, 04/18/2011 - 10:49 | 1180370 AldousHuxley
AldousHuxley's picture

* US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges

There is a void of leadership in US. Just talkers, no doers.Martin Luther King has been replaced by Al Sharpton, Lincoln has been replaced by Obama+Clintons, republican party has been replaced by neocon zionists.

* Both political parties now agree it is time to begin bringing down deficits as a share of GDP.

now is the time? It is way overdue and politicians will only bring asterity in non-defense spending. Basically put all our resources into military....US has WAR ECONOMY coming.

* US economy is strengthening as it emerges from recent recession.

If US economy consists of only top 0.1% of Americans. Everyone else is hopeless and depressed.

Mon, 04/18/2011 - 10:51 | 1180375 nickels
nickels's picture

S&P to Titanic captain as they climb into last lifeboat-- "By the way, your boat is leaking--"

Mon, 04/18/2011 - 10:51 | 1180386 Overflow-admin
Overflow-admin's picture

"It is not good news and it is not good news because to move towards austerity when the U.S. economy is not on sound footing is not a good idea"

But... but... economy IS recovering; how can they print that much propaganda???

Oops, sarc off: ><

Mon, 04/18/2011 - 12:33 | 1180803 SheepDog-One
SheepDog-One's picture

And why would there be a need for austerity measures if we WERE on 'sound footing'? WTF?

Mon, 04/18/2011 - 11:35 | 1180569 AldoHux_IV
AldoHux_IV's picture

Sounds like a poor excuse to impose unnecessary harsh austerity measures because solving the structural issues are politically impossible, but continuing the slavery is politically attractive for our scum-sucking policymakers.

Mon, 04/18/2011 - 12:03 | 1180690 Double down
Double down's picture

QE3 = swaptions with no default risk.

 

 

Mon, 04/18/2011 - 13:49 | 1181091 Grand Supercycle
Grand Supercycle's picture

'COPPER has ignored the recent equity bounce. Daily and weekly are not bullish' ~ March 31, 2011.

'When the sell off does occur, it won’t be pretty. As mentioned earlier, this market behaviour is similar to 2007 / 2008' ~ April 6, 2011.

'DOW/S&P500 is tracking sideways once again suggesting that short covering rally has lost momentum' ~ April 7, 2011.

http://stockmarket618.wordpress.com

Mon, 04/18/2011 - 13:49 | 1181102 lesterbegood
lesterbegood's picture

"

  • US Treasury's Miller says S&P negative outlook underestimates ability of US leaders to come together to deal with US fiscal challenges
  • Both political parties now agree it is time to begin bringing down deficits as a share of GDP.
  • US economy is strengthening as it emerges from recent recession."
  • HAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHA
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