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A Market Only A Mother Could Love

Tyler Durden's picture




 

We have again reached a point where attempting to explain away an utterly irrational market, in which sentiment and momentum shifts on a dime overriding any fundamental newsflow, and summarizing overnight catalysts has become a moot point. With stocks acting and reacting like petulant, schizophrenic children with ADHD, fundamentals are totally meaningless: yesterday and the overnight trading session have become perfect examples as prepared bulletins by two politicians, which said absolutely nothing of significance or constructive - have been enough to override 72 hours worth of actual fundamental deteriorating data, and also offset each other. Will Congress resolve the Fiscal cliff in its 10 remaining days in session without a major impetus to move such as a market plunge? Of course not, but once again the question has become one of who sells first, and the momentum piles on - and if there is no downside momentum, then logically there are no volume ramps to the upside: the market can no longer just stand still. In the meantime all the sellside firms have gone uber bullish on 2013, setting up the Fiscal Cliff as a perfect strawman. Of course the "Cliff" will be surmounted eventually, and after some near-term pain, but the reality is that the resulting rising taxes across the world in 2013 will be a major economic headwind, just the opposite of what the sellside crew is saying as one after another strategists push out optimistic outlooks on the next year to sucker in what little remaining retail interest in the farce formerly known as the market may be left.

In the meantime, the Shanghai Composite slid by another 0.5% overnight to a fresh post-2008 low of 1,963: why? Because as repeatedly said, the PBOC will not ease on fears of what the past summer's drought will mean for pork prices in 2013, and what every central bank entering eternal monetization phase means for hot inbound capital flows.

Also in the meantime, and confirming the schizophrenic nature of the underlying disconnect, both Japanese and Belgian yields have tumbled to either record or multi-year lows, even as PIIGS bonds are being bought, while stocks are rising at the same time. In other words, the same old mentality of  "buy everything" is back. It failed every time in the past, with bonds always and without fail proven correct over stocks, but perhaps this time it will be different.

We did get some data out of Europe, with Italy pricing EUR6 billion in 5 and 10 Year bonds at the lowest yields since November 2010, a day after Italian banks reported the first material deposit outflow in months. The result was taken as positive even thought the bid to cover on the 2022 BTPs was 1.18, well below the 1.43 prior, and barely covered. And yet the yield was 4.45%, down from 4.920% previously. Can one spell window dressing buying by Italian banks on fumes?

Elsewhere in Germany, unemployment rose for the eigth month in a row as companies curbed investment. The silver light here? The unemployment rise of 5,000 was less than expected. The unemployment rate, which came in just as expected at 6.9%, could not be spun.

Naturally, none of this in itself was market-moving. What was apparently enough to push the market-driving EURUSD to breakout from its trading band in the low 1.2940s? The very fundamental and catalytic opening of Europe around 3:00 am Eastern which forced the move of the major FX pair to 1.2990. Because nothing says Europe is getting stronger than a rising currency which is making the key GDP driver of the export-driven German economy that much more expensive.

Finally, and confirming that all news and data flow is just one big joke, was Eurozone Consumer confidence, which stayed flat at -26.9, same as last, and same as expectations, while Economic Confidence actually rose even as the Eurozone unemployment rate has risen to record highs, as the continent has officially doubled dipped, and as PMIs indicate more pain is coming. Makes perfect sense.

So what can one expect in this ritalin and geodon-addicted market?

Who knows: watch out for any fiscal cliff headlines, which will be spun in any way that the stop hunt du jour wishes them to be spun. And certainly watch out for anyone promising a better economy (which the market has not reflected since 2009) - with taxes about to rise substantially for many, the last thing a rational person should expect is additional so desperately needed CapEx spending. Certainly watch out for more corporate layoff notices as the only thing companies can control - their payroll - is forced to absorb ongoing declining revenues.

Finally, here is SocGen's take on why it may well be best to sleep through the rest of the day, week, month, and maybe year.

Outlook

Markets continue to trade off headlines pertaining to Greece and the US fiscal cliff and to be honest it is difficult to see anything fundamentally changing today. There are a number of data releases and central bank speakers of note, but the big trends in currencies and rates remain hostage to headlines on the Greek debt buyback and progress between Democrat and Republican negotiators in Washington, and the anticipation in stocks of some sort of breakthrough.

Eurogroup finance ministers are now looking to finalise the terms of a debt buyback by 13 December in order to offer guarantees to the IMF so that the next bailout tranche can be released. The current fear is that if a buyback programme results in new losses for Greek banks then a recapitalisation could be necessary (explaining the hit to share prices yesterday). In addition, markets are speculating that to get debt as a percentage of GDP below 110% by 2022 as stated in the EU communiqué, write-downs will be inevitable. German finmin Schaeuble has hinted in that direction if Greece's primary balance returns to surplus by 2016. For the moment at least, keeping Greece out of the headlines is nigh impossible and not something German leaders are keen on continuing before the election next year. Tabloids like Bild have started to pick up on the extra bailout cost for German taxpayers, but Chancellor Merkel will be pinning her hopes on the economy and the labour market to safeguard her re-election next year. Whether that is intellectually naive remains to be seen. After German inflation data yesterday showed a decline in annual CPI to 1.9% in November, higher unemployment (out today) would underpin the bid in bunds that pushed 10y yields back below 1.40% (swaps sub 1.70%)..

 

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Thu, 11/29/2012 - 07:39 | 3019808 vmromk
vmromk's picture

In summary, death to the motherfucking bankers.

Thu, 11/29/2012 - 07:59 | 3019831 Enslavethechild...
EnslavethechildrenforBen's picture

Google News headlines (lies) say Powerball could pay off the National Debt...

They aren't even taking care of the schools...

Death to all of the mother fucking insane Bankerticians and their war machine and their MSM brainwashing.

Thu, 11/29/2012 - 08:13 | 3019865 GetZeeGold
GetZeeGold's picture

 

 

Dude.....banksters have mothers too. I think.

Thu, 11/29/2012 - 09:27 | 3019870 Enslavethechild...
EnslavethechildrenforBen's picture

Bad parenting?

3019880

Thu, 11/29/2012 - 08:26 | 3019883 LongSoupLine
LongSoupLine's picture

Bankers are fucking hatched...similar to the movie Aliens methodology.

Thu, 11/29/2012 - 08:39 | 3019899 Enslavethechild...
EnslavethechildrenforBen's picture

Hatched for sure, then trained in the ways of evil and self-oriented parasytism

Thu, 11/29/2012 - 08:25 | 3019882 JustObserving
JustObserving's picture

Yes, Powerball will easily raise $52,000 in debt per citizen and $387,000 in unfunded liabilities per citizen.

Hey, every citizen - do your patriotic duty and buy a quarter million Powerball tickets.

Thu, 11/29/2012 - 08:54 | 3019924 GetZeeGold
GetZeeGold's picture

 

 

Gambling is a tax.....for people that can't do math.

Thu, 11/29/2012 - 09:11 | 3019957 swabeyjw
swabeyjw's picture

When interest rates are negative, the good 1 or 2% can borrow on the 99%'s behave. Out of the goodness of their hearts they can throttle the transfer to the 99% to match the value decay. Snuggle up - the 1% know what they must do. Money has always been debt - nothing new here. Don't forget a gift based society is simple corruption when the pressure is on. Suck it up digest your next dose of reality:

http://youtu.be/YtevF4B4RtQ

Thu, 11/29/2012 - 09:23 | 3019984 Enslavethechild...
EnslavethechildrenforBen's picture

Paper is money to the man who prints and spends it.

U are a fool if you actually belive you are in debt for his spending spree.

Thu, 11/29/2012 - 10:26 | 3020214 swabeyjw
swabeyjw's picture

Money under pins all forms civil liability as far as I am aware. Death and taxes. Liquidity and the vulnerable are at the margin. Mainstream is a fun place.

War by definition justifies collateral damage. War on terror is ill defined. We are in times of a force full hand. Common sense may well step aside but I do not see that it is even close at this time. Take care.

Thu, 11/29/2012 - 08:01 | 3019847 Haus-Targaryen
Haus-Targaryen's picture

In summary, death to the EMU and ECB. 

Thu, 11/29/2012 - 07:55 | 3019812 Yen Cross
Yen Cross's picture

 Trailing Stops/        if anyone can track a trailing stop?

 

   Tyler?  pumping my h`ard- Drive with adds?   F-Fair enough/

Thu, 11/29/2012 - 08:17 | 3019869 GetZeeGold
GetZeeGold's picture

 

 

Tyler? pumping my h`ard- Drive with adds? F-Fair enough/

 

.....and he's getting paid to do it. God bless Capitalism.

Thu, 11/29/2012 - 07:58 | 3019813 falak pema
falak pema's picture

here is somebody that has an original way of assessing what recession means and has stuck his neck out by saying "according to my assessment US recession will be evident by year end."

Its a courageous call as all the signals today are bullish : fiscal cliff USa canter and Euro greek tarama salad. 

Lakshman Achuthan Defends Recession Call - Business Insider

Maybe the TDs could feed on this line of thought. 

Thu, 11/29/2012 - 07:43 | 3019814 The Axe
The Axe's picture

Broken....

Thu, 11/29/2012 - 07:43 | 3019815 Iam Yue2
Iam Yue2's picture

People seem to be forgetting that Europe is already over the cliff, and there is no way back.

Thu, 11/29/2012 - 07:47 | 3019819 desperate dan
desperate dan's picture

Hey, it's month end. They always try to ramp this market up to close the month looking good.

Thu, 11/29/2012 - 07:51 | 3019825 Giom
Giom's picture

yeah and look at the NZDUSD, so excited maybe to be at 14 years high unemployment it does not matter....something will happen for sure, the participation is so low..but for the time being take small profits is better than big losses... the EURusd seems to do the same as 2 months ago 1.3 - 1.28 - 1.3 in 3 days ! ... WTF

Thu, 11/29/2012 - 07:51 | 3019826 Satan
Satan's picture

If the markets always did what was expected, we would all be fantastically rich.

Thu, 11/29/2012 - 07:52 | 3019827 Cognitive Dissonance
Cognitive Dissonance's picture

A Market Greater Fool Only A Mother Could Love

Fixed it for ya Tyler.

Thu, 11/29/2012 - 07:52 | 3019829 LongSoupLine
LongSoupLine's picture

The only way to win is not play with paper.

Fuck all you fucking expert network fucks.

Thu, 11/29/2012 - 07:56 | 3019834 mjorden
mjorden's picture

Some people out there need to learn to work more and spend less ... 

Thu, 11/29/2012 - 08:22 | 3019877 Enslavethechild...
EnslavethechildrenforBen's picture

Yes, so the Bankerticians can steal even more away from them.

You idiot.

Thu, 11/29/2012 - 07:57 | 3019839 Samsonov
Samsonov's picture

The fiscal cliff is being pumped by the media so relentlessly that I'm starting to believe that a grand set-up of joe six-pack is underway.  That's rather flattering for me, that they would think of me so much.  Well, that being the situation, all I have to do is be honest with myself about what I had intended to do--which is get back in the market before year end--and then do something else.

As an aside, what does the word sellside mean?  A sellside analyst is really just an analyst, so what's up?

Thu, 11/29/2012 - 08:00 | 3019841 Dr. Engali
Dr. Engali's picture

It's a completely insane market by design so that trust is comepletly broken in the old system as they pave the way to fundamentally transform the American economy.

Thu, 11/29/2012 - 08:00 | 3019846 Yen Cross
Yen Cross's picture

Don't ask?

Thu, 11/29/2012 - 09:25 | 3019880 Enslavethechild...
EnslavethechildrenforBen's picture

You mean the American Slaveonomy.

By definition, you can only have an "economy" if you have sound money, like barter, trade or a Gold Standard.

When you are forced by your captors to use their worthless pieces of paper and they recieve all the resources from your labor, I would call it a "slaveonomy"

Thu, 11/29/2012 - 07:58 | 3019842 Yen Cross
Yen Cross's picture

Long Soup Line) Give the fuck  e   Moniker!

Thu, 11/29/2012 - 08:07 | 3019856 LongSoupLine
LongSoupLine's picture

That one was for you YC....enjoy.

Thu, 11/29/2012 - 07:59 | 3019843 Winston Churchill
Winston Churchill's picture

Stop watching the"Muppet Show" aka the market.

Thu, 11/29/2012 - 08:00 | 3019845 mdtrader
mdtrader's picture

SPX right up at its 89 DMA around 1417. If you had looked at the markets last week at 1348 and thought what would be a good level to short. 1417 would be it. The SPX seems to be leading the way for some reason, as the Dow is still 150 points below its 89 DMA and the NDX is about 40 points away from its 89 DMA.

Thu, 11/29/2012 - 08:09 | 3019860 Boilermaker
Boilermaker's picture

LOL

Thu, 11/29/2012 - 08:20 | 3019872 Itch
Itch's picture

Knowledge is power.

Thu, 11/29/2012 - 08:21 | 3019874 LongSoupLine
LongSoupLine's picture

yeah...logical analysis....lol indeed.

Thu, 11/29/2012 - 08:44 | 3019906 mdtrader
mdtrader's picture

The point was it was stupid to be short at 1348, I posted the market was due a big move up at the time. I guess you missed it. Now at 1417 I'm happy to take my chances with a short. 

Thu, 11/29/2012 - 08:50 | 3019923 mdtrader
mdtrader's picture

Sorry I should have worded the first post better.  I meant if you were looking at the market from a neutral position at that time, what level would you want to get short.

Thu, 11/29/2012 - 08:05 | 3019852 Yen Cross
Yen Cross's picture

 It's Jet Lag/ guessing/ Mark`et open New/York?  I'm Going to have fun !

   Retrace, plus something

Thu, 11/29/2012 - 09:21 | 3019893 forwardho
forwardho's picture

We laughed mockingly at Dragi's "believe" speech, and the effect it had on EU markets. Now we find the U.S. market responding to mere words and insinuations. There  feeling of dejavu is haunting. We find we are just as screwed

Thu, 11/29/2012 - 09:21 | 3019979 EyesWise Shut
EyesWise Shut's picture

After more than two years of shorting the market on ZH-indoctrination, I finally give up. Tired to fight the FED and el al which have bigger guns. The trend is your friend and long live BTFD. I am expecting thanks from all of you if ever I should be the last "sucker".

Thu, 11/29/2012 - 09:43 | 3020040 schadenfreude
schadenfreude's picture

Since it's unclear when a collapse is due, I am taking tactical short term positions with little exposure to my cash stack. Worked well so far this year.

Politicians and the CB's won't give up in this fight easily, so I am prepared to game their game for some time.

Thu, 11/29/2012 - 12:38 | 3020685 OneTinSoldier66
OneTinSoldier66's picture

I once thought about trying to time the market. Notice the emphasis on "once" and "thought".

 

Actually, my own words are hypocritical in a sense. I don't blame anyone for wanting to take part in a market to try and make a profit. And perhaps it could be said that any time anyone makes any trade with a profit motive in mind, they're trying to time it. But you must first have a "market" in order to be able to do such a thing.

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