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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!!

 

Charts: Bloomberg

 


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Fri, 12/21/2012 - 13:01 | Link to Comment 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 | Link to Comment Frozen IcQb
Frozen IcQb's picture

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

Fri, 12/21/2012 - 16:01 | Link to Comment atoast2toast
atoast2toast's picture

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

http://www.cmegroup.com/trading/equity-index/files/PriceLimitGuide.pdf

Fri, 12/21/2012 - 13:02 | Link to Comment 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 | Link to Comment 1000yrdstare
1000yrdstare's picture

It's easy to ignore reality....

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

Fri, 12/21/2012 - 13:11 | Link to Comment 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 | Link to Comment Quinvarius
Quinvarius's picture

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

Fri, 12/21/2012 - 13:10 | Link to Comment 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 | Link to Comment Yen Cross
Yen Cross's picture

 The river DeNial runs through European Markets.

Fri, 12/21/2012 - 13:16 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment ChacoFunFact
ChacoFunFact's picture

wrong post

Fri, 12/21/2012 - 14:05 | Link to Comment 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 | Link to Comment 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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