Yen 'Carries' Equities, Market Continues To Be Totally Busted: GS Up $2.5/Sh As CDS 7 bps Wider!

Tyler Durden's picture

Here is the reason for the surge: all day everyone sold off yen and bought whatever risk assets they could find. The carry trade is back. Risk on. As equities surged higher, all the new found money had to be put somewhere: just as equity indices stormed higher so HY rushed back to the day's highs. Stocks, bonds, who cares - buy it all.

In the meantime credit is once again scratching its head at the lemmingness of stocks. Even with Goldman stock rising by $2.50, its CDS was 7 bps... wider! Nothing makes sense anymore. Sell yen, but whatever crap you can still get your hands on. The crappier the better. Obama said so.

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Racer's picture

It is now merely mathematicians modelling markets to some imaginary formula only known to them.

Any connection to companies is purely name only

Mark of Zerro's picture

It's gotta be Yen cause Goldman don't shake like that.


ZeroPower's picture

Heres the reason for the wider spread: everythings going up up up:)

emsolý's picture

in other news, equity end-of-day ramp-up will be starting at 2pm throughout this week in order to rectify last week's hiccup.

Internet Tough Guy's picture

What a herd of sheep. Whe the herd all runs to the other side of the trade this market will tip over faster than Guam.

UGrev's picture

Lee-Roy Jenkins says "OVER 36000!!"

Inspector Asset's picture

Why would the Viniar, Goldman’s Chief Financial Officer be the man who noticed the the US real estate market was weakening? Why wouldn’t it be the group of 16 mortgage traders for Goldman, (the rocket-scientists, genius quants) who he would tell “sell 10 percent” across the board, telling the him or theCEO, “hey listen, we need to dump this swine shit. Instead it is a top level down decision. And since “risk management” was done by Vinair himself on behalf of all 30 departments at Goldman Sach, when would he have had the time to notice what was going on in real estate? He must of seen it on the TV news.
So Goldman would win twice. Of course there level of real estate CDO’s is going to be nil at the same time they are shorting subprime. So, its not really a hedge at all. They dumped their subprime holdings (CDO’s), and then shorted that same subprime, (with CDS’s) making it a NET NET short real estate bet, getting the avalanch in the credit markets blazing full steam ahead. Once again Goldman shows God like powers on when a bubble will end. Or were they the ones to end it? And you take into consideration that at the same time we have the 2nd biggest bubble of all time in the oil market which I am sure Goldman profited from, just squezzing out Semgroup was a billion dollar trade. We have the 2 biggest bubbles of all time and Goldman calls the tops perfectly. And we still suppose to believe that the markets are not be manipulated

Leo Kolivakis's picture

Makes perfect sense to me, KEEP BUYING THE DIPS! These markets are rigged, and the financial oligarchs will do everything in their power to reflate risk assets in order to avoid debt deflation.

Orly's picture

Except NatGas.  Don't buy the dips on NatGas, people.  It's not going anywhere for maybe don't waste your time.

Chinese solar stocks are a good investment, though!


carbonmutant's picture

All NatGas needs is an administrion that will listen to TB Pickens.

Orly's picture

Never heard of him.  Move along, please...

carbonmutant's picture

You need to get out more.

Cursive's picture

@ Orly

LOL.  I have this thought everytime I skip by Leo's incessant solar pumping.  Did you see the stories of AEP laying off 10% of its workforce?  Duke and Dominion, too.  That's a lot of workers for a monopoly.

Orly's picture

No, I did not see that.  I have a lot of family in eastern Kentucky (spare me the sister jokes, please...).  A-K Steel re-opened their plant in Ashland but it doesn't look good if coal is not moving.  If coal doesn't move, steel is not moving.  If steel is not moving, nothing is moving.

Damn.  This is going to get really ugly a lot sooner than people think.

RichardENixon's picture

I wouldn't think of insulting you with Kentucky "sister jokes", but did you hear the one about the girl from Kentucky who was a virgin because she could run faster than her _____________? (Insert relative other than brother)

Internet Tough Guy's picture

Only the house wins in a rigged game, Leo. Everyone else, including solar stock bagholders, loses.

Al Huxley's picture

I would consider it if there was ever an actual dip to buy.

Hondo's picture

Inflating risk assets by issuing more debt is not going to work any better this time than after the dot com bust.

Bear's picture

Tonight is the night ... if ES pushes over 1200 and stays there tomorrow, then I think the sky is the limit ... bad for da Bear

merehuman's picture

Leo, isnt "buying the dips" consorting with the enemy, Isnt that feeding the beast so many say we should starve? Are profits all you guys think about? Where the hell is your concience?

And leo of course is not the only offender. I fully realize this site, Zero Hedge is for financial types. Still, isnt there a time when honor and doing the right thing is more important than profits?


Ned Zeppelin's picture

Whether you are hungry for profits or starved for justice, ZH has something for you.  

Orly's picture

I read your comment earlier and it struck me as an odd thought process.  Sorry.

First, when there is a true market, there is no enemy.  It is you against everybody else.  Kill or be killed and blah, blah, blah.

Second, there isn't a true market because someone has their thumb on the scale.

But, it ain't Leo.  Leo did not create this mess and Leo is not responsible for continuing abberations in the marketplace.  Since he is not responsible for it, he is not the enemy, either.

Therefore, Leo is simply playing the market that is before him and nothing more.  Market conditions are very, very odd right now but they are the conditions that we must play in.  If Leo is profitable in this environment, I say more power to him.


Prof Gulliver's picture

Everytime the market goes up, the explanation put forth here is it's just some technical quirk. In fact, this GS story will have no more legs than Greece, H1N1, the health-care bill causing a crash, bird flu, the collapse of Eastern Europe, the volcano, the insolvent banks ready to implode, ARMs resetting in 2009-2010, hyperinflation, hyperdeflation, etc, etc, ad nauseum. The Dow is headed to 12,000 and beyond. The game may be rigged, but it will continue far longer than anyone betting against it will remain solvent or alive.

cossack55's picture

Remember, remember, the 5th of November



QQQBall's picture

That's always the way it looks, until it doesn't.

Number 156's picture

I think it would be better to go to a legitimate casino, like those in Vegas or Atlantic City.


Ungaro's picture

Just because they have rules and strong enforcement and transparency and you always know who is on the other side of your bet??? Crazy talk!

Cursive's picture

Risk On.

There is risk?  But Bernanke says there is no risk anymore.  He's studied the Great Depression and he will not allow it to happen again.  See, no risk.  Buy, buy, buy.  I'm being sarcastic, but I see that several others before me posted something like this in all sincerity.  Well, no matter what our parents originally told us, most of us found out there is no Easter Bunny or Tooth Fairy.

Pure Evil's picture

But, Santa Claus still exists, right?

Racer's picture

Yes, his new new is

Sbenta Berclauske

Hephasteus's picture

Santa Claus exists in statistical insignficance for people who suck at math.

Jim Cramer's picture

Seriously??? NO EASTER BUNNY!!! 

HarryWanger's picture

But at the same time, it's difficult to deny that we're seeing some pretty decent earnings. Ok, for the sake of not arguing about whether the bank earnings are manipulated or not, let's put that aside and examine other corporate earnings.

Intel, IBM, CSX, etc. have put up strong numbers. Positive comments and guidance being raised from transports like FedEx and UPS are also good economic indicators.

Throw aside what has been a pretty good run of positive economic data (since again most here will argue they are manipulated) and focus on earnings and the reason for a market rally becomes fairly clear.

Jim Cramer's picture

Harry, when you throw a ball at the ground really hard it bounces pretty high the first time, then the second time it bounces lower, then third and so on and so forth.  To extrapolate the bounce to reality is just false.  The overall trajectory is down even if it appears you and your idiots think it's up.


Oh and earnings, doesn't revenue matter since that's what drives growth?  Wait wait then we would visit reality and see that top line revenue for most aren't going anywhere.  Of course you'll say look at the year before number, not a good argument still.  Believe me I want things to get better but when you don't fix shit that means things aren't better. 

HarryWanger's picture

I agree with your ball analogy. But a bounce is a bounce. Even as successive bounces aren't as high and level out, you've built a base upon which the ball bounces. The market is determining that base. So we've seen a big bounce off the lows and now a slight pause. Next we'll see a smaller bounce but off a much higher platform.

I disagree that the overal trajectory is down now. We've bottomed and technically (even to the EW folks) have entered a bona fide bull market. 

Regarding revenue, we are seeing revenue growth. That's the difference this Q - we're actually seeing top and bottom line growth.

Jim Cramer's picture

Your logic makes no sense except in a world where most people throw a ball on the roof of a house and it bounces off and they use that as the base.  Let me explain.....If you are six feet tall and the starting base was the top of your head 3 years ago and reality hits and suddenly the base is the ground you stand on then each succesive bounce from the base would be lower back to that same base.  At least a normal world it would be. 

Now the logic of the base that the market is using, let's see govt. printing presses, firing people, etc.  Really????  Just tell me honestly you beleive this base is a good one to build an economy on???  I mean that in all honesty you really believe we are on good footing in the economy???

fuggetaboutit's picture

The bounce coming out of the 2001 2002 recession was much, much stronger

And we were at the front end of a 5 year credit bubble, there was AMPLE credit available to any consumer or business

And we were at the front end of a housing bubble

And interest rates were more or less where they are now nominally and real interest rates were at least as negative as they are now

And international economies were on fire, materially stronger than now

And with all that going on, it took the S&P about 4 years to go from 750 to 1200 - with all of those tailwinds now headwinds, it has taken 18 months

Explain this, seriously.

Jim Cramer's picture

HARRYWAGNER NO FIGHTY>HARRYWAGNER NO UNDERSTAND TRUTH>HARRYWAGNER SOME 20 year old kid working at a financial firm telling you how to manage your money since he is so much wiser than you.

Eally Ucked's picture

Harrywanger is not so silly as you think, just one element is missing in his brightness - he will have to tell us when he jumps out from all that shit he has accumulated over time. If he does it and he is right - I'll call him genius!

Orly's picture

Yes and no.

Earnings for tech providers have been good 2/2 inventory adjustments and the box-carriers have had comps to a dismal last year and last quarter (no Christmas for you, Wanger!).

Banks, on the other hand, have had stellar quarters 2/2 prop trading and nothing more.  My sheet would look good, too, if I could borrow ten bills at zero and pump it into the 4X market; sell Euros, make a killing.

We'll see the earnings for real companies that make stuff, not just move it around or shuffle paper.  Don't light the cigar just yet.

Jim Cramer's picture

Great point, I think the earnings for real companies that make stuff will be interesting, I'm thinking like GE, revenue slids what was it 5% from this time last year???  Wow some recovery for what was the bellweather of the economy, that is until they reported and now no one mentions them since you can't work that into the "bull" camp. 

Mitchman's picture

And don't forget the Alcoa revenue miss.

Jim Cramer's picture

Notice Harry's response to this post.  "But there IS improvement."  Somehow he has correlated a slide in revenue for GE, AGAIN THE BELLWEATHER FOR THE ECONOMY, as an improvement. 

Wall St. economics at it's best right there!

HarryWanger's picture

Yes, comps have been easy. But there IS improvement. There IS revenue growth now at many of the companies. It's a start and it helps to explain why the markets are reacting so positively. Since we are seeing some earnings/revenue growth (in many cases top and bottom lines) then why wouldn't the market react positively?

Orly's picture

Why wouldn't the markets react positively?  Because they are supposed to see through the BS and cut the the real deal.  They can't, though, because there is a giant cloud of money floating around.

Revenue is up on comps and the inventory cycle.

Earnings are up on layoffs and reduced wages.

Where is Rick Santelli when you need him?

Rick64's picture

I agree. Very well laid out. You don't need Santelli.