• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

European Stocks Ignoring Everything (Like The US Until Last Night)

Tyler Durden's picture


While Italian and Spanish sovereign bonds weakened notably today, the equity markets across Europe decided that the limit-down move in US futures was a storm in a teacup and ignored it. EURUSD has broken its inexorable 10-day linear ramp leaving the USD almost perfectly unchanged on the week. Italy and Spain equity indices are up 2.6% and 3% respectively while Italian and Spanish bond spreads are around 16bps tighter. Rather like what we witnessed this week in the US, Europe's VIX exploded today (biggest jump since July) as protection was sought in a hurry but the underlying indices did not drop as (just like over here) they are simply too illiquid to cope with the kind of selling that is desired. This leads to the game-theoretical first-mover dilemma - and the preference was to hedge via bonds, FX, and options as Europe closed - because think of the optics if Spanish stocks were to fall?


Spot The Odd Market Out!!


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Fri, 12/21/2012 - 13:01 | 3087215 atoast2toast
atoast2toast's picture

get your facts straight, it was not limit down , that requires a 5% drop , trade was halted for 10 seconds 

Fri, 12/21/2012 - 13:11 | 3087266 Frozen IcQb
Frozen IcQb's picture

Yes it's 5% but it's also rounded to 10 points...

Fri, 12/21/2012 - 16:01 | 3087988 atoast2toast
atoast2toast's picture

from another thread - for the current Quarter it requires a 70 pt drop to go limit down 


Fri, 12/21/2012 - 13:02 | 3087220 Cognitive Dissonance
Cognitive Dissonance's picture

That's because the Euro died in the Mayan collapse and this is the liquor fueled wake.

<Monday will be when the hangover hits.>

Fri, 12/21/2012 - 13:05 | 3087235 1000yrdstare
1000yrdstare's picture

It's easy to ignore reality....

You CAN NOT ignore the consequences of reality....

Fri, 12/21/2012 - 13:11 | 3087257 Oldwood
Oldwood's picture

Like anyone even knows what reality is these days! We only know what isn't real and that is just about everything.

Fri, 12/21/2012 - 13:09 | 3087248 Quinvarius
Quinvarius's picture

Capital flight from the USA.  Repatriation.  Just like 1987 when we devalued by 40%. 

Fri, 12/21/2012 - 13:10 | 3087255 kliguy38
kliguy38's picture

Its all Kabuki theater to make you think something other than the Fed and algobots are in this market and the Dems and Reps are actually "deliberating"......MSM condition the peeps for their "austerity" and the wash rinse repeat cycle continues unabated......now back to you football....nothing to see but the hand

Fri, 12/21/2012 - 13:12 | 3087268 Yen Cross
Yen Cross's picture

 The river DeNial runs through European Markets.

Fri, 12/21/2012 - 13:16 | 3087289 Tom_333
Tom_333's picture

The river Ponzi flows thru the whole world.Please accept that nothing will change.

Fri, 12/21/2012 - 13:16 | 3087285 chinaboy
chinaboy's picture

Someday, everyone in the world will ignore the US "equity market". But then the European "equity markets" are fraud in their own rights.

Fri, 12/21/2012 - 13:23 | 3087321 rubearish10
rubearish10's picture

Yes and EUR.USD's making new daily lows as we converse. It is likley that many fear the trap door affect!

Fri, 12/21/2012 - 13:25 | 3087336 rubearish10
rubearish10's picture

Lastly, it would be quite facinating to see a creeping meltdown in exchange for all  those levitating meltups! Bring it on, we've got time.

Fri, 12/21/2012 - 13:25 | 3087337 dcb
dcb's picture

I almost wrote a note asking what folks thought of yesterdays action

I expected a fade in the afternoon, but kept my shorts in which paid off today. was very confused. I didn't mnd buying into some s and p yesterday at the low because I figured I had a 50% chance of payback

*It made no sense as we hit the top of weekly trend on tuesday. often I buy 1/2 of my long again, but my short purchase was very large and the market has been funny s and P is now where I expected it to be yesterday

Fri, 12/21/2012 - 13:34 | 3087371 rubearish10
rubearish10's picture

Now now, you must always keep your shorts. Thanks for sharing your approach but we're just having fun here.

Fri, 12/21/2012 - 13:27 | 3087341 Bastiat009
Bastiat009's picture

The financial world has been ignoring the rest of the world for years now except when it needs to be bailed out, which is every other week. In the end, the financial world cannot lose anyway ... so ignoring everything is irrelevant. 

Fri, 12/21/2012 - 13:45 | 3087406 ChacoFunFact
ChacoFunFact's picture

wrong post

Fri, 12/21/2012 - 14:05 | 3087494 disabledvet
disabledvet's picture

I thought we were big on "decoupling issues" here? Like "if equities move one way and sovereign debt another" that "we're looking at a head fake here"?

Fri, 12/21/2012 - 14:19 | 3087545 market le pew
market le pew's picture

I think it's simply a matter of too many traders short Europe and long US out there

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