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And Just In Case There Is No Deal...

Tyler Durden's picture


It would appear that despite the market's apparently self-fulfilling 'proof' that we will not go over the cliff, that investors are far less exuberant than the indices would suggest. Today credit and interest rates markets are not following along and over the last two days, implied volatility (VIX) has been significantly bid as prudent investors appear comfortable (or stuck) holding their near-record net longs (as long as they are put-protected)... The volatility term-structure has flattened significantly (14 month flats) as short-term put buyers are very active (and not just in HLF).

Stocks remain on their own as credit and volatility is unimpressed...


and in fact there has been significant protection buying...


which has crushed the term-structure of vol to 14 month flats...


So, once again, retail investors are propagandized into buying the rally by a media that sees only what it wants to see (a market rally that 'proves' the cliff won't happen) - while professionals are selling into rallies (AAPL as an example) and hedging aggressively (VIX) what they can't sell (due to illiquidity).


Don't care about all this vol-stuff and term structures? well perhaps this chart will help...


Charts: Bloomberg


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Thu, 12/20/2012 - 15:14 | Link to Comment EZT
EZT's picture

Im short, lets see how it goes.

Thu, 12/20/2012 - 15:16 | Link to Comment unrulian
unrulian's picture

Bad idea T-shit chick's structure is significantly unflattened

Thu, 12/20/2012 - 15:25 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Warren "Let's Really Stick It Up The Taxpayers' Assholes AmIright Charlie Munger" Buffett & Jeremy Siegel say to buy and hold stocks for the long run.

Thu, 12/20/2012 - 15:33 | Link to Comment lunaticfringe
lunaticfringe's picture

Yea, especially want you to buy the stocks I own so I can get the fuck out. Suckers.


Thu, 12/20/2012 - 15:25 | Link to Comment Piranhanoia
Piranhanoia's picture

Tell me again I want to buy a T-shirt with tits and strap marks and some girl I don't know on it?

Thu, 12/20/2012 - 15:52 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Buying anything associated with tits > buying anything not associated with tits.

Consider, the band selling JGBs.

I'll take 2!

Thu, 12/20/2012 - 15:45 | Link to Comment Essential Nexus
Essential Nexus's picture

Thumbs up.  Good luck.

Thu, 12/20/2012 - 15:15 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Acapulco ...

Thu, 12/20/2012 - 15:55 | Link to Comment DoChenRollingBearing
Thu, 12/20/2012 - 15:22 | Link to Comment Darth Mul
Darth Mul's picture

Wait until they get this Iran war going.


I suspect they'll more aggressively go after internet freedom when that clusterfuck starts.


And the Usual Suspects will be the most vocal proponents.  Little Liebermans, using American 20 year olds as shield and sword for big oil, big gas, and Eretz Israel.


Long non-Mansanto seeds.


Did you know Monsanto is run by Mennonites?


True story.

Thu, 12/20/2012 - 15:23 | Link to Comment buzzsaw99
buzzsaw99's picture

imo HLF is better than most. ackman is a turd

Thu, 12/20/2012 - 15:24 | Link to Comment Cdad
Cdad's picture

In the last hour, stocks have ripped upward on no volume...mindlessly following the SPY [which rises now on lemming, group think criminal bankers who all use it as a macro short against their bright equity ideas].

Check your VWAPs...look down.

Thu, 12/20/2012 - 15:40 | Link to Comment disabledvet
disabledvet's picture

You're not related to Fred Grandy are you? Anywho "there are no retail investors"...probably courtesy of people following the shorts into the shitter

Thu, 12/20/2012 - 19:30 | Link to Comment asteroids
asteroids's picture

Today's action was the inverse of yesterday. The computers are fucking with us.

Thu, 12/20/2012 - 15:25 | Link to Comment Fred Garvin
Fred Garvin's picture

There will likely be a deal. It is all about the tax threshold. The house will send it's version at 1mil. The Senate will amend and send back with the Dems 400k play. Something will go back to the Senate between 500k and 750k which will likely get passed.

Or they choose to drive us over the cliff. I would rather have Toonces driving

Thu, 12/20/2012 - 15:35 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Obamney will cave by raising taxes on all who makes less than 1 millions doll-hairs and eliminating the school lunch program (which constitutes 0.000000000000000000001% of the federal budget), while increasing Aid-To-Banks-With-Sick-Loan-Portfolios&PrimaryDealers by 1200%, and increasing defense spending by 80 trillion dollars.

Thu, 12/20/2012 - 17:40 | Link to Comment Esso
Esso's picture

Evidently you've been paying attention.

That's against the law now, you know.

Thu, 12/20/2012 - 15:27 | Link to Comment Oldballplayer
Oldballplayer's picture

Does this mean that I should buy TVXX for real this time?

Thu, 12/20/2012 - 15:28 | Link to Comment 1eyedman
1eyedman's picture

put-protected is an understatement, geez they are all expensive....even expiry tommorrow is priced to see a 15 spx point decline!   tlt long is  a better buy...

Thu, 12/20/2012 - 15:29 | Link to Comment justtotaketheedgeoff
justtotaketheedgeoff's picture

OT but has anyone else noticed that the Wells Fargo website is down? Or am I behind the curve? Again?

Thu, 12/20/2012 - 15:49 | Link to Comment youngman
youngman's picture

I had problems yesterday with it

Thu, 12/20/2012 - 15:30 | Link to Comment ZeroPower
ZeroPower's picture

Left the desk at 1pm EST today after coming in to close some positions for EOY during the EU session. Volumes were simply ABYSMAL. I.e German Bund, typically trades around 800-900k contracts/day, had only 100k traded 3 hours into the day!! Spreads in euribors and eurodollars had very low volume too, only thing thats left is the machines quoting, and we all know how much they 'want' those fills huh.


The vix positions we're seeing put on are more likely people wanting to protect whatever positions they're holding over the holidays. One could wake up with shitty rhetoric coming out of Merkel or the fiscal cliff comedy, and, since its too hard to trade out of anything with a big position right now (unless you hit bids and offers thereby getting shitty fills) only other wise thing to do is go intra-asset and choose some volatility to hedge whatever's left in your book.

Lotsa people i know are taking next week off since its right smack in the middle of the holidays, so that week might really see some funky moves/settlements from people who absolutely have to close something out eoy.

Thu, 12/20/2012 - 16:08 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Whisper rumor that Kevin Henry is going to Geithner's house next Wednesday for some crazy ass E-Trading.

Thu, 12/20/2012 - 15:33 | Link to Comment kito
kito's picture

im guessing pms dont like the idea of major cuts... and they are MAJOR....something to the tune of over 50 percent of the yearly deficit.....coming from an impasse thats triggers the cliff...........i am surprised that the dollar isnt gaining strength from the idea that the budget gets much closer to being "less imbalanced" with an impasse.....................

Thu, 12/20/2012 - 16:00 | Link to Comment fonzannoon
fonzannoon's picture

LOL the US will go off the cliff, the defecit gets halved, the dollar rallies, S&P upgrades us and congratulates us for taking a major step in the right direction....Obama and Boehner both come out and have press conferences claiming our actions are ridiculous and terribly detrimental. they reverse the cliff, we go back to a trillion dollar defecit and get downgraded and ridiculed by the ratings agencies. sounds about right.

Thu, 12/20/2012 - 17:09 | Link to Comment kito
kito's picture

what will poor bernanke buy if the cliff happens??? all that yearly deficit spending wiped away???? fonz, lets create our own bonds, back it with our full faith and credit, and sell them to bernanke so he can make up for the shortfall!!!!!!!!!!!!

Thu, 12/20/2012 - 16:15 | Link to Comment fuu
fuu's picture

Don't you still owe someone a turkey sammy?

Thu, 12/20/2012 - 16:28 | Link to Comment fonzannoon
fonzannoon's picture

Me or Kito? Kito paid up. I spent half the year saying QE was definitely coming and changed my mind right before they announced it. No one asked me to make a bet or I probably would have lost both somehow.

Thu, 12/20/2012 - 16:53 | Link to Comment fuu
fuu's picture


Thu, 12/20/2012 - 17:11 | Link to Comment kito
kito's picture

i think i still owe Quazi Mohammad Rezwanul Ahsan Nafis a turkey sandwich.....i sent it to him, but he returned it....something about it not being halal meat..................

Thu, 12/20/2012 - 19:12 | Link to Comment Quazi Mohammad ...
Quazi Mohammad Rezwanul Ahsan Nafis's picture

So hungry.

Thu, 12/20/2012 - 19:47 | Link to Comment kito
kito's picture

quazi!! good to hear from you! about a nice corned beef sandwich from 2nd avenue deli????

Thu, 12/20/2012 - 15:40 | Link to Comment Jeepers Creepers
Jeepers Creepers's picture

We're going over the cliff, there's not going to be a deal because apparently Obama thinks he'll come out ahead politically if we go over and that's all he really cares about, it's certainly not governing in the best interest of the American people.  It's just one long political campaign.


Hell, the more unemployed Americans using EBT cards and Obamaphones the better. 


Thu, 12/20/2012 - 15:46 | Link to Comment wisefool
wisefool's picture

It is all fun and games till some poor legionaire shows up on your door and tries to read legislative history to you from paul ryan. He has the stuff commerce is made of. A brilliant mind and leader of the new MIC. We shall have banquets to him.

Thu, 12/20/2012 - 15:42 | Link to Comment azzhatter
azzhatter's picture

There is so much good news today, I almost wet myself. Damn shame everything got fixed on the last day of the planet. Oh well

Thu, 12/20/2012 - 15:53 | Link to Comment Yen Cross
Yen Cross's picture

 O/T Has anyone checked on the Asians? It's 12-21-2012 over there. Has the other side of the planet cratered yet? Not a chance with the Fed. on the job, pumping inflation into Asia...

Thu, 12/20/2012 - 15:58 | Link to Comment Tombstone
Tombstone's picture

Here's the only deal we got coming: more debt, less wealth and a grand screwing over.

Thu, 12/20/2012 - 16:10 | Link to Comment worbsid
worbsid's picture

The Winter Soltise occures at 11:12 GMT so the Asians have a ways to go yet.  That's 0312 PST so if I wake up in the morning, I MADE IT!!!  If not, do I care about Asians? 

Thu, 12/20/2012 - 18:27 | Link to Comment Yen Cross
Yen Cross's picture

 That deserved a down vote. sarc/( do you work for NASA?) You should care about the asians, as there is mucho dinero to be made in Asia.

  10:26 p.m. Zulu/

Thu, 12/20/2012 - 18:28 | Link to Comment one_fell_swoop
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Do NOT follow this link or you will be banned from the site!