Is This Why Europe Is Selling Off?

Tyler Durden's picture


The odd timing of the Fed's QEternity (given macro data, risk, financials conditions, inflation expectations, and equity valuations) provided some impetus for the markets which had anticipated Bernanke's action. The supposed 'safety net' which we suspect has now been used up - by market front-running from a lower than implied Fed Put strike - does however look in question as the US fiscal cliff looms and global growth concerns grow. However, as Deutsche notes, there remain a large number of hurdles ahead for Europe - and while many 'believe' that progress has been made, it seems now that the rubber is meeting the road, that path forward looks a little less clear - and hence risk-wary investors are unwinding peripheral ST exposure and reverting back to the core (or US MBS/TSYs).


So Far So Good...


But The Going Gets Tough From Here...

  • Spanish Government may want to stall OMT request until after regional election (October 21st)
  • Structural reform plans in Spain are to be presented very shortly - which could form the basis for an MoU
  • Italian Government currently delaying aid request to avoid losing momentum on reform implementation
  • Pressure on Italy likely to mount after Spain requests aid
  • Ultimately market pressure to dictate whether Italy requests aid before / after the election in early 2013



  • Greek program significantly off-track
  • TROIKA report delayed, don't expect decision until late Oct/Nov
  • The most likely outcome is an extension of the Greek program via tacit agreement that covers the larger up-front needs, with finding shortfalls discussed further down the road (e.g. Official Sector Involvement)


  • Euro zone PMIs surprised to the downside in September
  • Composite PMI down to 45.9, 8th month of contraction
  • Substantial drop in Services to 46.0 but moderate rise in Manufacturing to 45.5


  • Today's news that Finland, Germany, and Holland are not chomping at the bit to provide their capital is a large set-back for bank re-caps


It seems the road ahead is just as prone to mines as the road traveled and as we have seen again and again - while Germany (and her 'AAA'nxious friends) are happy to toe-the-line with jawboning and showing support verbally, once the need for real hard money comes to bear - it appears the faith is gone...


We remain cognizant of the odd timing of Ben's deliverance and wonder just what he knew that we do not yet...

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Wed, 09/26/2012 - 14:56 | 2833041 PrintingPress
PrintingPress's picture

Print them up some more hope & change!

Wed, 09/26/2012 - 15:21 | 2833114 Debtonation
Debtonation's picture

But the world comes to an end on Dec 21.

Wed, 09/26/2012 - 15:35 | 2833159 wandstrasse
wandstrasse's picture

BTW, PrintingPress, I really feel very sorry for you.. overstressed and abused since you exist, by all kinds of sinister bankers and politicians.. what a fate.

Wed, 09/26/2012 - 14:59 | 2833051 Oh regional Indian
Oh regional Indian's picture

I hear a giant sucking sound in the middle of the Mediterranian Sea.


Wed, 09/26/2012 - 15:16 | 2833099 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

On that thought maybe we could send Kim Kardasion to Europe.  She could parade around and instead of rioting Europeans could gossip about her.  It works here, anyway.


Wed, 09/26/2012 - 15:25 | 2833127 magpie
magpie's picture

Soros brought HuffPo to the Spaniards, why are those ingrates even protesting ?

Wed, 09/26/2012 - 15:01 | 2833055 slaughterer
slaughterer's picture

One day you will wake up to check your screens and you will see WTI at $130 and ES at 1000.  This will happen all overnight because of one N. finger.

Wed, 09/26/2012 - 15:12 | 2833087 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

One day everyone will wake up and find out unless ones investment has intrinsic worth it is not an investment.

Wed, 09/26/2012 - 16:13 | 2833368 walküre
walküre's picture

one N. finger

Nigerian finger?

Wed, 09/26/2012 - 15:03 | 2833062 JustObserving
JustObserving's picture

Mario Draghi needs a big put.  Maybe, Bernanke will lend him his.

Wed, 09/26/2012 - 15:04 | 2833065 Jlmadyson
Jlmadyson's picture

Oh they know.

They know Greece will fail and there is no answer for Spain. Everything is spilling over at this point and they are at the point of no return.

They have to do this as there is no other answer in their minds.

Everything is totally distorted.

Wed, 09/26/2012 - 15:15 | 2833095 bank guy in Brussels
bank guy in Brussels's picture

The riots in Spain and Greece are extremely emotionally felt all across Europe

At the Brussels offices which are the centre of the European Union institutions, the feeling of the riots is getting so strong, that the riots may as well be right outside the windows of their headquarters Berlaymont, Charlemagne, and Justus Lipsius buildings

The EU mandarins are beginning to realise they got it all wrong with this 'austerity' programme targeting the low-income workers and pensioners in the Mediterranean

Wed, 09/26/2012 - 15:26 | 2833131 falak pema
falak pema's picture

hahaha, are you trying to be funny?

Wed, 09/26/2012 - 17:01 | 2833568 Scalaris
Scalaris's picture

''The EU mandarins are beginning to realise they got it all wrong with this 'austerity' programme targeting the low-income workers and pensioners in the Mediterranean''



Unlike the economic policies imposed on the average Mediterranean worker and pensioner, by them, rendering their lives valueless.

Wed, 09/26/2012 - 17:22 | 2833666 Dan Conway
Dan Conway's picture

Give it a few more months and they will be rioting outside of your fancy brussels office as well.  People are rioting because their corrupt governments made promises that they could never meet.  So the governments are forced to stop spending money they don't have and that is a mistake?  I can agree that maybe the allocation of the cuts could have been a little different regardless a lot of people were going to be upset.  Get used to the riots because the idiots in Brussels don't seem to be reacting in a way that will fix Europe's fiscal problems.  If you are european govt/elite type, then my advice is to watch out for those pitchforks!

Wed, 09/26/2012 - 15:06 | 2833069 Yen Cross
Yen Cross's picture

Anyone watching CNBS right now ? Look at Santellis face, as these two asshats talk about BTFD!  Priceless!

Wed, 09/26/2012 - 15:07 | 2833074 wandstrasse
wandstrasse's picture

The ultimate bailout for the elite is and remains: war.

Wed, 09/26/2012 - 15:09 | 2833077 razorthin
razorthin's picture

They need to manufacture some back and fill action in the markets.  Otherwise, main street will be on to what all we here know is happening - the beginning of HI...the end.

Wed, 09/26/2012 - 15:08 | 2833079 slaughterer
slaughterer's picture

Growth?  The growth that Europe (the Old Country) can provide is over.  With all the focus on "saving" dying peripheral countries, Europe has not invested wisely in its own future.  Nobody in Europe has a entrepreneurial spirit let alone a valid and new business concept.   There are no successful "start-ups" in Europe.  The Continent survives on tourism and its own rotten, dying heritages.   Go to Europe to drink, eat and kill yourself.  Do not go there for valuable growth.  

Wed, 09/26/2012 - 15:14 | 2833091 LawsofPhysics
LawsofPhysics's picture

Growth is dead, period.  the flux of energy is all that matter in this petri-dish called earth.  humans need energy in order to do anything much less be "entrepreneurial".  Human population growing exponentially, can the same be said for the flux of energy?  NO.


Nice predictions for oil slaughterer, what about silver and gold?

Wed, 09/26/2012 - 15:15 | 2833098 nope-1004
nope-1004's picture

The US is not far behind.  The only growth industry over the last decade was "financial engineering", basically inventing different nefarious ways to lend someone money that will never pay it back.  It drove house prices up, caused Lowe's to expand, home builders to splurge, but now we see the real pig behind the curtain.  Thinking there needs to be growth in the first place is part of the problem in a society that has lost most of its production.


Wed, 09/26/2012 - 15:20 | 2833113 LawsofPhysics
LawsofPhysics's picture

Yes, over 30% of the U.S. GDP is nothing but "paper-pushing", adds no real value.  Eat the fuckers, at least that woud be productive for the undertaker.

Wed, 09/26/2012 - 17:25 | 2833678 Dan Conway
Dan Conway's picture

30%?  That is just government portion.  Double that and then you are probably closer to reality.  How much of our GDP is from iCrap and chiptle burritos?

Wed, 09/26/2012 - 16:17 | 2833386 walküre
walküre's picture

Innovation is a concept exclusively reserved for the US and China then? The only economies capable of dealing with higher energy costs are the Europeans. They're planning decades in advance. I guess when only a fraction of their GDP goes towards a military industrial complex, the result is more funding into renewable energy and preservation of resources.

Wed, 09/26/2012 - 15:11 | 2833086 Darth Mul
Darth Mul's picture

If I told you it was likely a couple dozen guys - from a handful of banking and aristocratic families - arranging to paper-pay for lots of weapons to start an especially nasty world war, would you call me a conspiracy theorist?


The future's been rehearsed.



Dum dee dum.

Wed, 09/26/2012 - 15:18 | 2833103 slaughterer
slaughterer's picture

 Watching Darth Mul's "Grey State" preview, there was a split second where I saw myself getting shot in the back of the head by a FEMA goon on screen in 2013.  How did they get that on there?

Wed, 09/26/2012 - 15:19 | 2833108 Pure Evil
Pure Evil's picture

We gotta build the Death Star first!

Shovel ready jobs!

Infrastructure bitchezz!

Wed, 09/26/2012 - 16:24 | 2833420 walküre
walküre's picture

The planet is choking at 7 billion people. Does anyone really believe this planet is ever going to see 9 billion or more? It's plain and simple impossible to support a global population of that size. As much as it pains me to admit, we are on a path to self destruct.

Now back to watching the latest "Octo Mom interview" followed by "19 kids and counting".

Wed, 09/26/2012 - 18:27 | 2833865 elementary
elementary's picture

The entire population of the world could fit into the state of Texas. They would be arranged in lots of 50' X 100', accommodating four people per lot, with enough aerable land to grow food. Obviously, this does not account for roads, parks, community areas, etc., but the point is this whole "overpopulation is killing the planet" is the same Bullshit propoganda as global warming.  They are schemes to control you, your wealth, your liberties, freedoms and ideas, and allow a small, greedy elite to rule the world.

Wed, 09/26/2012 - 15:14 | 2833092 wandstrasse
wandstrasse's picture

decades of Keynesian ponzi-fiat-delusional-malinvestments -> big boom, small bust -> boom, bust -> small boom, big bust -> no boom, very big bust -> people getting angry, demand more state -> mindless money printing, more malinvestments -> hyperdepression -> people revolting, demand 'strong leader', identify culprits -> totalitarianism. 1984 style.

Wed, 09/26/2012 - 15:24 | 2833125 abgary1
abgary1's picture

The question shouldn't be 'why is Europe selling?', it should be 'why isn't North America selling?'

Wed, 09/26/2012 - 15:37 | 2833172 sessinpo
sessinpo's picture

Selling? It's just one day. This type of thread isn't really useful until a trend is establised. It's called a fluxuation at this point. Give me consecutive days and weeks and then we have real thread to be posting on.

Thu, 09/27/2012 - 08:36 | 2834907 Pumpkin
Pumpkin's picture

I realized the trend a long time ago.  You put your money in, and they steal it away.

Wed, 09/26/2012 - 15:26 | 2833128 Jason T
Jason T's picture

I'm getting scared frankly .... things aren't looking so good.

Wed, 09/26/2012 - 15:34 | 2833148 sessinpo
sessinpo's picture

Simply currency wars and their effect. Oil runs things but there is plenty of oil and other carbon fuels, just not enough financial reason to produce it.

Wed, 09/26/2012 - 15:34 | 2833154 NRGIsFree
NRGIsFree's picture

Take it easy fellas. They have been trying to get their war going for years. The good guys are conspiring as well. One way or another this system has to go. I'm not going to question the manner in which it falls.


Wed, 09/26/2012 - 16:43 | 2833500 walküre
walküre's picture

War is coming.

Financial mess. Increased domestic security. Boogey man. Cartoons. Closure of consulates and embassies.

Everyone draw their own conclusions.

Wed, 09/26/2012 - 22:08 | 2834333 Catflappo
Catflappo's picture

Oh he knew something.   The Fed does not operate in a vacuum.    Yes, the QE announcement was pre-emptive - no doubt about that.

Thu, 09/27/2012 - 04:17 | 2834682 fibonacci618
fibonacci618's picture

Why would Bernanke and his gang know more than you know, Tyler? Isn't it scary enough what we know? So the Fed acts and takes decisions based on what the whole world already knows. It's just that a lot of people do not agree or are very unhappy with what the Fed is doing. I do not think any secrets eventually uncovered would really change the global economic-financial picture we have nor the Fed policy besides getting even more extreme.

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