Copper

"Way Down" (Bunds 1,34% unch; Spain 5,92% +9; Stoxx 2475% -0,8%; EUR 1,274 +20)

Leveraging EUR strength (USD weakness) in the US-open-to-EU-close to ramp stocks to highs was rapidly followed by a collapse back to reality in US equities from EU-close-to-US-close. Just remarkable. Treasuries and FX markets were much less exuberant over the entire lack of news that drive the S&P up over 20 points from open to EU close and sure enough - helped by the obvious desperation of a 'failed' Yellen-threat - equities retraced it all; ending the day back near the recent lows. Stocks once again tested the bottom of Draghi's Dream and rejected it; commodities were mixed and very dispersed with Copper and Silver swinging wildly (up on the day) even as the USD ended the day practically unchanged. Tech and financials are the losers still on the week as AAPL clawed its way back to marginally green by the close with the magical $545 level now critical four days in a row.

Fiscokiller, fa fa fa fa fa fa fa fa fa fa

Sigh... Volume is around 50% of average. USD ends the day unchanged; Treasury futures imply an unchanged cash market; Equity indices close practically unchanged but there are some odd-ones-out on the day. Utilities were sold much more heavily that the rest of the S&P sectors (with Tech the only other red sector). Copper managed an outlier gain while oil/gold/silver all dropped. Individual stocks suffered from some exchange drama but all eyes were on JCP (which potentially lost Mr. Ackman $106mm today and ended with a $17 handle (-13%) - its lowest since March 2009; AAPL slid from 'exciting' opening highs to close -0.75% finding every ramp to VWAP was sold into. VIX was the story of the day as much was made of the collapse in front-end risk premia - this (as we explained earlier) was only half the picture as the longer-dated VIX rose relatively as the fiscal-cliff event risk is gradually priced in at year-end. Stocks were considerably more volatile intraday than broad risk-assets (thanks to Treasuries closure) especially after Europe's close, but they ended the day pretty much recoupled.

Well, after the Great Disconnect last week, next to the Great Pumpkin, and Sandy, we had Election week and suddenly the great Wake-Up Call. Fiscal Cliff was suddenly all the rage and ramped up equities (disconnect) were beaten flat by bonds.

"Wake Up" (Bunds 1,34% -11; Spain 5,81% +17; Stoxx 2481 -2,4%; EUR 1,271 -130)

It's been a mere seven weeks since the CNBC'ers announced to the world that every widow, orphan, and pet-monkey should buy the market with both hands and feet as Bernanke just opened the gates. The exact phrase on the evening of QEternity was:

"Buy everything that's not nailed down... as bearish as I want to be, you cannot fight the Fed. You buy everything. Buy copper, which i did today, FCX which i mentioned last night. Anything else? Emerging markets! everything! Just buy it. Buy it all. You never have to short again. Buy it. I had a guy call me today trying to sell me research on the short side, and I said I'm sorry, I think you're going to go out of business. You shouldn't short anymore."

Things haven't quite gone as planned...

Europe had wanted a rebound, tried to hold on, panicked, sold off, triggered stops – and recovered as the US, although not rebounding fast and furious, at least held the line. EGB running a little out of steam, although August levels were traded again in Bunds. Periphery eventually tracking Risk, but with no own dynamic. Need to see how things close tonight. No More.
"No More" (Bunds 1,34% -2; Spain 5,81% -3; Stoxx 2481% +0,1%; EUR 1,271)

Hmmm… Initial rebound after yesterday’s bashing was rather modest, settling on a bit better and awaiting US input. Spain overdid its auction, which looked just good in the sense of being able to say it sold a new bond for size – to its dealers. ECB, happy to have provided the idea of OMT to save the world from simple panic, now going pessimistic (in non-panicky way). It’s just soft out there… It’s the economy, Stupid! And it is weak.
"Bop 'Til You Drop " (Bunds 1,36% -2; Spain 5,84% +16; Stoxx 2479% +0,1%; EUR 1,275)

As the Romney bounce was removed last night, German (and European) growth is lowered, AAPL's dominance is questioned, and the 'fiscal cliff' (oh yeah that) comes into focus, is it any wonder equity markets dumped today. Depending on which index you looked at, equities fell the most in a year (or a month) with the Dow and Nasdaq closing below their 200DMA. Gold and Bonds outperformed and S&P futures plunged further after-hours closing below its 100DMA for the first time in over 3 months (as VIX closed at 19% - its highest in 3 months)

"Pinball Wizard" (Bunds 1,38% -5; Spain 5,68% +4; Stoxx 2486 -1,8%; EUR 1,276)

 Markets have found a good excuse to be on hold. Elections. No real US figures and a tendency to ignore European ones. No shoe dropping means upside, a little. Core EGBs rather firm nevertheless, for choice. Periphery, in absence of news, trading back and forth, so better today. EZ Q4 growth looks like stalling with a catch-up of a more lenient summer. More to come.
"Elected " (Bunds 1,43% +1; Spain 5,64% -9; Stoxx 2513 +0.5%; EUR 1,281)

Nothing really mattered… Eventually. Europe correcting Friday’s excessive optimism, in line with the US, treading water ahead of the elections. Still, the Periphery remained under (controlled) pressure with Spain cornering most, if not all negative headlines today – ahead of Thursday’s auction. 10 YRS periphery backing up to (selective) symbolic levels of 5% and 5.75% (damn’ near 6%).

Moments ago the Non-manufacturing ISM came out, and in keeping with the theme of Baffle with BS, started last night when the China HSBC services PMI dropped even as the Manufacturing PMI from last week signaled the start of a "new recovery" or something (just don't look at the Baltic Dry, and definitely don't look at the endless barrage of reverse repos proving the PBOC will not engage in wholesale easing), it printed the first miss and decline in three month, coming at 54.2 on expectations of a 54.5 print and down from 55.1 previously. What is troubling is that while otherwise an economic miss such as this one would have been sufficient to ramp the bizarro marke, today it has merely sent ES to fresh intraday lows. Perhaps the reason is that unlike last week's Manufacturing ISM, whose headline was good but internals were not, this time it is the other way around with New Orders down but Employment rising from 51.1 to 54.9, the highest since March. Does this meant the Fed will prematurely end QEternity? Of course not, but the market appears to be shooting first, as usual, and asking questions later.