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Europe Continues Lower Left To Upper Right

Tyler Durden's picture




 

Forget for one moment that the region is mired in a recession-to-depression state; wipe from memory the faltering capital base of the EFSF/ESM mechanisms; dismiss the overnight failure of a Greece agreement; ignore Schaeuble's dismissal of any joint-and-several liability; all you need to do is buy in Europe. Buy dips, buy rips, buy bad news, buy good news - s'all good. Sovereign debt spreads continue to compress on the week - Portugal -99bps and Spain -26bps for example (and GGBs soared on buyback hope). Equity and credit markets have just gone 'Birinyi-rule'-like from lower left to upper right this week without pause or contemplation. Whether EURUSD dips or rips, whether oil prices dip or rip; you buy risky stuff with both hands and feet. Meanwhile LTRO-encumbered bank spreads are underperforming and Swiss 2Y rates deteriorated today.

EURUSD is invincible... since as we noted previously - it's all about the Fed/ECB balance and expectations for Spain's request

 

as are stocks and credit...

 

with European Stock indices charging...

 

and European sovereigns are on a roll too...

 

but LTRO-encumbered bank debt is underperforming...

 

Is JPY weakness and Treasury weakness now inferring correlated risk-on everywhere? Or is it just a holiday/illiquid week where the algos are in charge?

 

Charts: Bloomberg

 

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Wed, 11/21/2012 - 12:50 | 3002281 Looney
Looney's picture

Long - Guillotines with (gold/silver) coin acceptors

Short – bill acceptors

Wed, 11/21/2012 - 13:50 | 3002504 slaughterer
slaughterer's picture

Debt reduction options:

1) debt buyback

2) loan interest cuts

3) return of SMP profits 

Coming soon to a Bloomberg Box near you.   

Wed, 11/21/2012 - 12:53 | 3002284 Jalarupa
Jalarupa's picture

Dump n Pump

Wed, 11/21/2012 - 13:26 | 3002405 The trend is yo...
The trend is your friend's picture

When the markets are rigged, one has to think like the manipulator.  If i were in their shoes, what would i be thinking....??? Ah yes, I have to make it seem as if all is well in the world otherwise the US idiots will not get in long lines in front of stores for "Black Friday" junk they can't afford.  Today will be a good day to spend some money to prop up the markets.

Go long V and MA

Wed, 11/21/2012 - 12:53 | 3002285 FubarNation
FubarNation's picture

Jesus Christ some giant sleeping guy just took over my screen!

Wed, 11/21/2012 - 12:57 | 3002294 Cognitive Dissonance
Cognitive Dissonance's picture

"Or is it just a holiday/illiquid week where the algos are in charge?"

The algos are always in charge. There are just days when we can convince ourselves otherwise.

Wed, 11/21/2012 - 13:14 | 3002366 DavidC
DavidC's picture

And what the powers that be don't understand is that when it breaks, and it will, the algos will either waterfall it down or hit STOP.

DavidC

Wed, 11/21/2012 - 13:02 | 3002314 falak pema
falak pema's picture

doom n gloom gets outplayed by levitated CB broom sticks and banksta pressure play; know your enemy and understand this roller coaster is not over.

A roller coaster stays a roller coaster. And it doesn't look like they have turned off the current to this machine. 

Those who think the Euro tanks big time lose their shirts, swings and roundabouts abound all the way. 

Wed, 11/21/2012 - 13:13 | 3002361 DavidC
DavidC's picture

Well, I was certainly expecting a bounce or rally from the sub 12,500 area on the Dow, but today is another of those days that just seems to defy any form of logic (OK, OK, I know...!).

Bad figures, ANOTHER Greek can-kick, Benny boy last night saying the Fed couldn't do much more, it's down to the Government and what do we get, a 40 plus point ramp from the open and now stuck there...

Sheesh.

DavidC

Wed, 11/21/2012 - 13:13 | 3002362 CrashisOptimistic
CrashisOptimistic's picture

This disaster on Greece HAD to be covered up for Black Friday.

Greece WILL run out of money.  There IS an endpoint to the European technique of delay and say it's okay.  Greece is running on that 4 week paper they churned up last week.

The odds have shifted away from 90-10 that the EU gives them infinite money to 60-40 they will be cut off Monday.  If you read the report you can see that it's a hopeless situation that the Fin Mins were finally forced to accept.

Wed, 11/21/2012 - 13:16 | 3002370 DavidC
DavidC's picture

Then France...then Spain....then Italy...then the UK....etc etc.

DavidC

Wed, 11/21/2012 - 13:21 | 3002385 CrashisOptimistic
CrashisOptimistic's picture

That's the underlying problem lurking.

If you read the Reuters draft report, it's very clear they have no maneuvers left.  None at all.  They either forgive 100+ Euros of debt they loaned in just the past 2 years, or it falls apart.  There is no way Germany and the Dutch are going to do this.

And, of course, that introduces what is inevitable.  If you outright forgive Greek debt, then the other countries will demand the same.  The Irish already did get an interest rate cut.  They will next demand write downs.

And if you're a country that paid down debt, you'll demand refund.

This is the crusher in the report.  If Greece is to get more time, that extra time has to be funded with more money.  And EVEN GETTING MORE TIME is not enough.  There have to be write downs, too.

This report has put them in a corner.  It is the WORST report or output of any of these meetings that we have seen.

The odds have shifted.  They are no longer in favor of them getting money.

Wed, 11/21/2012 - 14:04 | 3002566 youngman
youngman's picture

Funny thing is even if you take away all of Greece´s debt....their economy is so screwed up....they they can not work at the zero debt point...they are still running a deficit....and will

Wed, 11/21/2012 - 13:42 | 3002469 oldfruit1
oldfruit1's picture

tyler, your lack of understanding about markets is truely laughable, esp as you have an analysts skill for clever financial chat. who the fuck cares about any of the factors you mention unless it causes some tangible change in day to day affairs of companies listed on the S&P for example. why do you think marekts should move a certain amount on specific data points? this is logic of quant rocket scientist fuckwits who caused all the recent finanical mess .. if it were that simple do you not think that everyone would be a millionare in the stock market by now?

the markets are going up because they are predisposed to fucking going up you idiot .. until something REAL AND PRESENT fucking happens to change the status quo .. funds will keep pushing a flow of money into equity, credit, commodities etc.

oldfruit.

 

Wed, 11/21/2012 - 13:51 | 3002503 oldfruit1
oldfruit1's picture

the truth is that nobody gives a flying fuck about greece, its a tiny country, everyone knows they have loads of debt but they are not bothered as most people realise they will be able to keep muddling through for years and years.

you talk about recession .. but is it really recession across the whole eurozone, if anything its flatlining .. big deal .. the pie isnt getting bigger for the time being.

your wish that the market falls .. is clouding your judgement .. open you fucking eyes and start thinking.

Wed, 11/21/2012 - 14:43 | 3002760 DavidC
DavidC's picture

It's not so much about Greece as the knock on effect.

DavidC

Wed, 11/21/2012 - 13:43 | 3002473 Bastiat009
Bastiat009's picture

So tired of these the-euro-is-doomed and Greece-is-saved stories. I have read dozens of them over the past few years and it turns out all of them were just lies.

John Lennon used to sing:

I'm sick and tired of hearing things
From uptight, short-sighted, narrow-minded hypocrites
All I want is the truth
Just gimme some truth 

I've had enough of reading things
By neurotic, psychotic, pig-headed politicians
All I want is the truth
Just gimme some truth 

Wed, 11/21/2012 - 13:44 | 3002475 dracos_ghost
dracos_ghost's picture

Shorts are demoralized. Why take/hold a position and wrestle it downward at this point when some dipshit can tweet a BS BBG/Reuters/CNBS neural discharge that the "fiscal cliff" is solved, Greece is now the wealthiest country in the world, Truce on, Truce off, unicorns are real and they like Greek Debt, blah blah blah.

The 50% Faber correction call was the sign of the short term bottom. If the markets can't get more than 6-7% on all the retardation out there, it looks like the remaining shorts might be in for some dry penetration short squeezing here. Hedgies need to make their book by end of year. Friggin sad.

ZH had a post awhile back saying that the SPX with implied inflation from QE was around 1455ish. Gee, let's see where the markets close end of year. 

Wed, 11/21/2012 - 13:55 | 3002516 slaughterer
slaughterer's picture

 Wait until the low-vol B-Team "KH home alone" week is over, then short the market again on Monday.  

Wed, 11/21/2012 - 13:53 | 3002509 oldfruit1
oldfruit1's picture

there are no fucking shorts left to be demoralised buddy! they are all wiped out .. inc the ones which may have read the advise on this fuckwits site :)

Wed, 11/21/2012 - 14:00 | 3002531 slaughterer
slaughterer's picture

You can only be tactically short or tactically long in this market.  "Doom em' and gloom' em'" dogmatists like Marc Faber or Nouriel Roubini or Kyle Bass or Hugh Hendry or Charlie Bidermann will get run over from time to time.  Now is one of those times.   

Wed, 11/21/2012 - 14:12 | 3002594 oldfruit1
oldfruit1's picture

faber / roubini / bidermann are all talk and no trousers .. they sell media .. a bit like ZH .. and have no skin in the game. therefore they will TALK (not trade) to the most captive audience and tell them what they want to hear .. being controversial always sells better.  

H hendry is a fucking joke .. runs a tin pot fund in the middle of some s london high street .. fucking jumped up asset manager. likes being on tv more than actually fucking trading.

K bass deserves respect for shorting credit into 08 but fear that may have clouded his judgement into being a serial shorter of everything .. these 2 might find their lights go out soon enough.

 

 

 

Wed, 11/21/2012 - 15:04 | 3002842 chubbyjjfong
chubbyjjfong's picture

Bulls on Parade!

Wed, 11/21/2012 - 15:28 | 3002912 VonManstein
VonManstein's picture

Maybe its just that the DX is fucked the EUR austerity priced in...

US stocks aint doing all that, so the Algos arnt in chage all that much... or perhaps they are exhausted just keeping things flat. Thats what they are essentialy, flat.

Its a crack-up as far as im concerened

US is now to suffer as EU has suffered. Simples!

Wed, 11/21/2012 - 16:02 | 3003053 Nobody For President
Nobody For President's picture

Was there a huge street sale Monday of cocaine that I missed?

Damn!

Thu, 11/22/2012 - 10:32 | 3004358 Grand Supercycle
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As forecast during 2011 & 2012 - USDJPY protracted basing has resulted in bullish daily, weekly and monthly charts & multi year rally is likely.

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