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26 Sep 2012 – “ Bad Rain " (Slash & The Conspirators, 2012)
26 Sep 2012 – " Bad Rain" (Slash & The Conspirators, 2012)
Yes, it did feel kinda rainy already yesterday at market close, but the “Purple Rain” quickly transformed into a sea of red, as the market digested (non-voting) FED’s Plosser comments on his doubts on QE. Not that there was much in revelations in what he said, but somehow, it confirmed what everybody seems to fear deep inside. In any case, a good reason for a “sell-off” (It might have been the biggest drop in the S&P in a month, but, hey, we’re talking about just over 1% in the close, so hardly world-shattering for the moment).
Asia caught in the movement, with Japan particularly hit (-2%), having outperformed yesterday. China hitting a new low, closing just above 2.000, back to late Jan 2009 levels. Beware of further acceleration with China be closed for holiday during the whole of next week
Sprinkle on that belated mulling on the Spanish situation, BuBa’s Weidman renewed hard-line stance (and, btw, 7% is NOT outworldish, as having been tested in the past by some)(although at that time with higher growth and inflation figures against that) as well as conditioning on bank-aid and renewed legal checking (although rather rumoured than confirmed) on the ECB buying (not the ESM), as well as no ex-post ESM bank bailout, and you have a perfect mix to kick-start another day to hang out there to dry – under the rain. Bad Rain.
Total Risk Off start with Bunds down 6bp to 1.52% (ahead of the auction). Periphery kicked down the road in short and longs (2 YRS Italy +10 to 2.38%, Spain +11 to 3.20%, Italian 10s +8 to 5.24% and Spain thrown back to 5.84%, which is damn near to the symbolic 6%).
European equities down 1% plus. Credit still in massive correction phase after rolling out the new series with the Main wider by 4.5% and Financials out by 3%. Commodities downed with Brent off by over 2%. Gold stable (something needs to be) and EUR at 1.287.
(Light) Data front in line with mood with French Consumer Confidence down to 85 (fcst 86 unch), coupled with leaks confirming that tonight’s jobless claims with print way past the 3m-mark. Italian retail sales down 3.2% YoY (fcst -0.8% after -0.5%). Bank of Spain still seeing Q3 GDP falling at a “significant” pace. German CPI as expected +2.1% after 2.2% YoY.
Less comfortable day for a Periphery sales: Italy sold EUR 9bn 6m bills at 1.503% (last 1.59% end of Aug), Mediocre bid to cover of 1.4 and obviously with a tail up to 1.547%. Seemed to have been quoted 20 bp tighter yesterday.
Will be selling EUR 3bn each of on-the-run 5s (COB 4.12%, last 3.71% mid-Sep on off-the-run 5s) and 10s (COB 5.27%, last 5.82% end of Aug) tomorrow (next to EUR 1bn FRN).
Seemed like great back-drop for the German auction in full ROff mode: EUR 5bn 10 YRS sold at 1.52%, barely a concession to this morning’s lows (COB had been 1.58%, last 1.42% early Sep and early Aug), but with the BuBa loading up on EUR 1.8bn of paper, as there were only bids for EUR 3.9bn in total, of which EUR 3.2bn were allocated. 3 cts tail. Good result price-wise, but a fail nevertheless…
Spanish bonds wider by 25bp in2s to 3.34% and 24bp to 5.95% were shaky enough to actually support Bunds nevertheless and the immediate reaction after the auction result was about 1 bp widening in German 10s and then back to the day’s lows. Odd world.
Bunds hitting 1.50% (-8bp) as appetizer ahead of lunch, with Spain printing 6.000% (+29bp) (Spread, easy to guess, out by 37bp and hitting a round +450) and equities down 2% / Credit 6% wider.
Midday levels: Bunds 1,51% (-7), OBLs 0,56% (-5), BKOs 0,049% (-1,5) with UST 1,66% (-6)
Spanish 2s 3,31% (+22), 10s 5,98% (+27). Spanish 2-10s 267bp (+5). Hit 6% in 10s for the first time since 18 Sep.
Italian 2s 2,38% (+10), 10s 5,23% (+7). Italian 2-10s 285bp (-2).
1.286. Oil & Copper -1.75%.
Drifting sideways until US open (flat / slightly negative) and ahead of the sole US data set of the day. New Home Sales for Aug at 373k (fcst 380k after revised +2 to 374k) / -0.3% MoM (fcst +2.2% after +3.6%) not helping to lift spirits any higher…
10 YRS Bunds and UST back to 05 Sep, respectively 07 Sep levels… Ok, the Bund auction was a fail, but who cares? On the contrary, these amounts are missing now…
Oil inventories eventually of no interest, price action just depleted.
Yes, it did feel rainy yesterday… Total Risk Off close. Bad Rain.
Credit still mega-sluggish side (5-7% wider), back to early Sep levels. Equities (-2.6%) pretty much evenly and straight down the chart, no rebound really worth more than 0.25%.
Bunds closed at 1,46% (-12), OBLs at 0,52% (-9) and BKOs 0,033% (-3,1) with UST at 1,64% (-8)
Spanish 2s at 3,39% (+30), 10s at 6,03% (+32). Spanish 2-10s 264bp (+2).
Italian 2s at 2,41% (+13), 10s at 5,27% (+11). Italian 2-10s 286bp (-1).
Closing pretty on LOD (1.45%) in Bunds, HOD 6.03% in BONOs. Spain’s budget presentation will need to be quite convincing to turn around the mood.
EUR at 1.285 no more entangled in 50d, 100d & 200d MOV at 1.293 / 1.294 / 1.297
Commodities crashing.
Bad Rain, really Bad Rain!
New Issues side-lined on Risk Off and widening spreads. Lone appearance of the day was unrated Austrian steel-maker Voestalpine with EUR 500m 6 YRS at MS +295.
Closing levels:
10 YRS Yields: Germany 1,46% (-12); Luxembourg 1,59% (-4); Finland 1,72% (-13); Netherlands 1,74% (-11); Swaps 1,75% (-6); EU 1,90% (-6), Austria 2,04% (-7); France 2,20% (-8); EIB 2,20% (-5); EFSF 2,36% (-6); Belgium 2,55% (-5); Italy 5,27% (+11); Spain 6,03% (+32).
10 YRS Spreads: Luxembourg 13bp (+8); Finland 26bp (-1); Netherlands 28bp (+1); Swaps 29bp (+6); EU 44bp (+6); Austria 58bp (+5); France 74bp (+4); EIB 74bp (+7); EFSF 90bp (+6); Belgium 109bp (+7); Italy 381bp (+23); Spain 457bp (+44).
EUR swap curve 2-5 YRS 47bp (-4,0); 5-10 YRS 80bp (-2,0) 10-30 YRS 57bp (-2,0).
2 YRS German BKOs closed 0,033% (-3,1) and 5 YRS OBLs 0,52% (-9).
Main at 141 from 134 (5,2% wider); Financials at 209 after 194 (7,7% wider). SovX at 149 from 137. Cross at 581 from 547.
Stoxx Futures at 2497 / -2,6% (from 2563) with S&P minis at 1429 (-1,9% from 1456, at European close).
VIX index at 16,7 after 14,1 yesterday same time.
Oil 89,3/108,6 (WTI/Brent) from 92,8/110,9 (-3,8%/-2,1%). Gold at 1747 after 1772 (-1,4%). Copper at 371 from 380 (-2,4%). CRB at EU COB 303,0 from 308,0 (-1,6%).
Baltic Dry again down 1.5% to 752 from 763. Still up 13.6% from the 662 low 10 days ago. Maybe it’s just like catching a cab when it rains. And someone really wanted to ship least week (iPhones?)
EUR 1,285 from 1,296
Greek bonds guesstimates: Unsurprising 25bp widening, Greece 2023s closing back to 19.5% (20% Friday) and 2042s back to 18% (18.25% Fri).
All levels COB 17:30 CET
Rest of this week:
Spanish budget tomorrow and bank audit due on Friday 28 Sep. Italian auction tomorrow.
EZ: Thu M3 & Biz Climate fcst -1.2 unch, final Sentiment Data -25.9, Fri CPI fcst 2.4% after 2.6%
GE: Thu unemployment fcst 6.8% unch, Fri Retails Sales fcst -0.9% YoY (after -1%)
FR: Fri final Q2 GDP 0.3% YoY, Aug PPI fcst +2% YoY, Consumer Spending fcst -0.7% YoY
Italy: Thu Sep Biz Conf fcst 87.5 (last 87.2), Fri PPI fcst +2.5% after 2.4% YoY, CPI fcst 2.7% after 3.3%
Spain: Thu Housing Permits (last -32.6% YoY) & Retail Sales fcst -6.1% after -7.3%, CPI fcst 2.8% after 2.7%
US: Thu GDP revision, Personal Consumption, Durable Goods, Claims, Home Sales
Click link on title or below for today’s musical support:
Released this very afternoon. Hot off the press, as so much these days - so to speak
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Fucking best rock album released in years. Bad Rain is a great song, but pretty much all the songs on that album rock.
Slash still shreds, like no other guitarist has ever shredded.
I highly recommend that album, proceed at warp 8 to your nearest record store or online downloading site and get it.
This is a galaxy wide Starfleet priority directive!
Totally agreed on record quality. Last one rocked, too!
Yep. Always do w/ fiat currencies. Thanks for the link. Good article and an interesting site (Financial Sense: Applying Common Sense to the Markets).
misposted
Helluva good time to short the Euro folks.
Make a FX Casino bet where the House of Global Central Bankers have rigged the game? No thanks. I'll just buy Gold and Silver.
The results of their game-rigging is very predictable at times. They're creating enormous distortions in markets that create terrific opportunities for those who follow the FX markets closely.
I hear you. I'm just not knowledgeable enough to even think about stepping into that arena.
Several weeks, maybe a couple of months ago, I saw a few people saying "short the euro, it's the easiest no-brainer there is!" One was some guy I saw on a youtube clip that was supposed to know what he was talking about, I wish I could remember who it was. Anyway, that was back when the Euro was at like 1.28 or so. Since then I have watched as the Euro has done nothing but go up against the dollar to 1.31. Until it finally stated to drop some just recently. I am soooo glad I didn't step into that!
Good luck to those such as yourself that feel comfortable with it though.
It's eerily similar now to early May 2012. Back in April, I posted here that I intended to "adapt" to all of this by playing the CB's insanity. I'm no FX expert but I dabbled in it years ago and have played the FX demos almost daily for years. What I posted in April was that I raised the capital I needed by applying for every credit card I could find online. I got plenty. I had good credit. In early May, Tylers posted an article about how the world had gone "full spectrum risk off" which confirmed my own belief at the time ("Absolutely!" is what I said.) I'd never seen it so clear and extreme in my years of following FX. I said I was going "all in" on shorting EUR/USD, AUD/USD, and NZD/USD.What the hell...it was the banks' money. I only stood to ruin my credit. I didn' t care. A few years ago, I lived in a storage unit.
By late May 2012, I was a millionaire when I posted that it had paid off and I was cashing in (to the delight of some and the consternation of many.) I stayed out over the summer as the Euro rose (things turned full spectrum risk on.) We're back to risk off mode. A flight to the "safety of the dollar" is underway. Heh.
I won't be going "all in" again. I'm not that greedy (almost all of it is in physical gold and silver, though I doubt I'll live long enough to spend much of it. Been enjoying it while I can, which is why I didn't post all summer -- I wasn't even online and that was awesome.)
I most definitely recommend all of the above to anyone. Little to lose, so much to gain. And Tylers definitely know when it's "risk on" or "risk off". They're fucking financial geniuses and they recognize the reality of the markets/world economy.
Wow NewWorld Orange. That is quite the trade that you, along with the help of ZH/Tylers, figured out there. Very nice and congrats on your success!
While I don't know how old you are, I wouldn't doubt if you live long enough to enjoy some of your gold and silver. Just my opinion, but I think the end of fiat is nigh.