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Same Cliff Different Day

Tyler Durden's picture




 

We could say that news is actually relevant or matters in this "market" but we would be lying, just as we would be lying if we said that this market has not become so utterly predictable, with yesterday's late day market surge - on yet another ridiculous catalyst - visible from so far away, it was almost painful to watch it take place in real time. Sure enough, futures are now sliding back, and giving back much of yesterday's gains - but don't worry, in a day full of even more meetings and flashing red headlines, at least some combination of carefully phrased MSM words will set off today's algo-driven buying frenzy, guaranteeing yet another "retail investor" decides they have had it with this farcical "free market" casino for ever.

There was actual news out of Europe, where Italy sold 5 and 10 year bonds in the first underwhelming auction in months, placing just €5.88 billion of a maximum €6.0 billion target, at rates that were higher compared to the November auction: €3 billion in 10 Years sold at 4.48% compared to 4.45% in November, although the Bid to Cover was modestly higher at 1.47 compared to 1.18 previously; €2.87 billion in 5 Years sold at 3.26% vs 3.23% in November, and a virtually unchanged BtC of 1.29 vs 1.24 last. We also learned that the French economy grew by 0.1% in Q3, below consensus expectations of a 0.2% growth rate, with the surprise once again held in capital investment, or the lack thereof, which fell 0.3% Q/Q. Finally we learned that Spanish November retail sales tumbled 7.8% in constant prices, but somehow this was better than expected. A far bigger problem for Spain is that its housing prices are expected to continue tumbling as Telegraph's Ambrose Evans-Pritchard reminded (original Zero Hedge article from June).

As noted earlier, none of this actually matters. What matters is today's second to final episode of the Fiscal Cliff drama, summarized by Jim Reid best: President Obama is expected to meet with Congressional leaders at the White House today. The meeting will be attended by Senate Majority Leader Harry Reid, House Speaker John Boehner, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell. The President had a call with Reid, Boehner and Pelosi late Wednesday night to receive update on the negotiations but no details about the conversations have been given. As noted by the Washington Post, perhaps the most significant development is that McConnell, who has signalled an interest in cutting a deal, will be engaged directly in White House discussions for the first time. According to the WSJ, most officials believe any deal is most likely to emerge in the Senate so all eyes will be on the congressional leaders’ meeting later today ahead of a hectic (and cold) weekend ahead for those in Capitol Hill. Beyond that, the Dow Jones Newswires also noted that Republicans will hold a closed-door caucus meeting at 9am ET Monday.

And just in case political headlines were not enough, prepare to see massive market surges on flashing red headlines forecasting clear skies: "while the House may be in session from Sunday through to the 2nd of January, we may need to watch the weatherman for some cues on how travel plans will be affected by the Northeast winter snow storm that is causing havoc in many parts of the country."

What can one say: fun "market."

More from Jim Reid:

It was a session of two halves for US markets with ‘hope’ arriving late in the day to arrest the ever increasing pessimism of a deal before year end. With just five days left on the cliff-countdown calendar, yesterday saw the S&P 500 drop as much as -1.29% to hit an intraday low of 1,402 and the Dow cross below 13,000 for the first time since early December. These early losses were prompted by comments from Senate Majority Leader Harry Reid who said that it looks like the fiscal cliff is where the US is headed. Overall there has been little progress made over the last 24 hours other than more finger-pointing from both sides, which are still seemingly as far apart as ever. Hopes of an 11th-hour deal rose later during the day on reports that the House of Representatives will reconvene on Sunday (6.30pm ET). The news sparked a late rally to see the S&P 500 (-0.12%) close off the day’s lows and the Dow march back up to 13,096. The VIX index also recovered and finished the day unchanged after having reached a 5-month high of 20.9 at one point yesterday.

In the latest development after the closing bell overnight, President Obama is expected to meet with Congressional leaders at the White House today. The meeting will be attended by Senate Majority Leader Harry Reid, House Speaker John Boehner, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell. The President had a call with Reid, Boehner and Pelosi late Wednesday night to receive update on the negotiations but no details about the conversations have been given. As noted by the Washington Post, perhaps the most significant development is that McConnell, who has signalled an interest in cutting a deal, will be engaged directly in White House discussions for the first time. According to the WSJ, most officials believe any deal is most likely to emerge in the Senate so all eyes will be on the congressional leaders’ meeting later today ahead of a hectic (and cold) weekend ahead for those in Capitol Hill.

Indeed, while the House may be in session from Sunday through to the 2nd of January, we may need to watch the weatherman for some cues on how travel plans will be affected by the Northeast winter snow storm that is causing havoc in many parts of the country. Beyond that, the Dow Jones Newswires also noted that Republicans will hold a closed-door caucus meeting at 9am ET Monday.

Continuing on with the theme, DB’s Frank Kelly yesterday said that he remains hopeful that both sides will reach a significantly watered-down version of an agreement to delay spending cuts before year-end, although he notes that the sense of urgency amongst Congressional members has been lacking. Frank’s comments were made before all the overnight developments we mentioned above. For those interested in his latest take on the situation, Frank will again host a conference call today as part of a daily update series. His call and replay details are provided at the end of today’s EMR for those interested.

In reality the weaker data also weighed on yesterday’s price action. US consumer confidence fell short of market consensus (65.1 v 70.0) and was down for the second consecutive month reflecting fears of the ‘fiscal cliff’. The sharp decline in future expectations (66.5 v 80.9) caught our eye which also turns out to be the biggest one-month fall since August 2011 – a time when market volatility picked up sharply amid US debt ceiling and rating downgrade concerns. Although initial jobless claims (350k v 360k) and new home sales (4.4% v 3.3%) came in better than expected, risk sentiment was largely driven by the budget impasse.

Moving on to the overnight session, Asian equity markets are off to a reasonably positive start overnight as hopes of a deal are lifted ahead of the meeting today. The Nikkei (+0.8%) is stronger as the JPY hits a 28-month low against the greenback (86.5) as a disappointing industrial production (-1.7% v -0.5%) print boosted the case for more monetary accommodation. Elsewhere, Japan’s headline CPI fell -0.2% yoy in November which was in line with consensus.

Turning to the day ahead, data flow will be relatively thin with the main highlight being the Chicago PMI and US pending homes sales. Ahead of that, Italy is targeting to auction up to EUR3bn in each of 5yr and 10yr bonds and France will be reporting its final Q3 GDP and consumer spending numbers. Fiscal cliff developments remain the key focus though with the White House meeting later likely to take center stage. Meanwhile the Senate also convenes today at 9am US EST (2pm London).

 

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Fri, 12/28/2012 - 08:26 | 3101165 GetZeeGold
GetZeeGold's picture

 

 

No word from Hillary.....again.

 

Boehner hasn't made his mind up yet.

 

Harry Reid......is in the corner....mumbling to himself......why did the founding Fathers give those Aholes in Congress the checkbook?

 

The President is not in DC......so he can't screw anything up.

 

I expect zero action today.

Fri, 12/28/2012 - 08:28 | 3101178 stocktivity
stocktivity's picture

It's all Bullshit!!!

Fri, 12/28/2012 - 08:28 | 3101179 Ghordius
Ghordius's picture

in defense of the Founding Fathers:

 

A) they did set up two houses for that, one directly elected and one for delegates from the the state's legislatures

B) they did not set up an Imperial Tax Token Currency

the "A principle" worked well because there is no better comptroller to a bunch of elected politician than another bunch of elected politicians envious of any taxpayer's money not spent in their own turfs (see current situation in europe, compare confederation with federation)

the "B principle" is probably unnecessary to explain here, particularly to you

both principles were thrown overboard in 1913, the year when the US started to become imperial in earnest

Fri, 12/28/2012 - 08:31 | 3101183 GetZeeGold
GetZeeGold's picture

 

 

in defense of the Founding Fathers:

 

Glad to hear you're pulling for us Amigo.

Fri, 12/28/2012 - 08:38 | 3101189 Ghordius
Ghordius's picture

in my youth I did more than words under the shadow of the Stars & Stripes - against communism

in my eyes I've earned the right to critizize. and yet it's still "...a republic, if you can keep it"

Fri, 12/28/2012 - 08:43 | 3101194 GetZeeGold
GetZeeGold's picture

 

 

"...a republic, if you can keep it"

 

We're treading water as fast as we can.....wish us luck.

Fri, 12/28/2012 - 08:56 | 3101206 Ghordius
Ghordius's picture

luck? ok, I wish you luck, but I don't think you need that. you lucky SOBs still live a charmed life billions would gladly exchange everything for

what you IMHO really need is to look beyond this sheer endless propaganda and go back to your real core values

and they don't involve any of the red-hot divisive issues you bother so much about

just a thought: realize how much trust and credit you still have as a nation. what an incredible amount of goodwill

Fri, 12/28/2012 - 09:06 | 3101216 GetZeeGold
GetZeeGold's picture

 

 

you lucky SOBs

 

Oh yeah....we're just lucky. How many times have we saved your asses again?

 

If this gets really bad we're not going to count on support from you...but do feel free to criticize us all you want.

Fri, 12/28/2012 - 09:14 | 3101232 Ghordius
Ghordius's picture

oh, yes, I still have that bone to contend with you

ok, ok, you saved us in the Cold War, as a Cold Warrior myself: undying appreciation for my brothers in arms

you saved "us" (actually the Brits, for a price) in WWII from our fascists: fine by me, thanks

but would you please explain to me from what exactly you saved "us" the first time?

WWI left unfinished biz that was picked up in WWII, and than again in the Cold War

but you guys still have to explain yourselves WHY you sent millions of Dough Boyz the first time

and the answer still escapes you because you still don't really like it: it was about grabbing a couple of european empires (for your multinationals)

Fri, 12/28/2012 - 09:19 | 3101243 GetZeeGold
GetZeeGold's picture

 

 

oh, yes, I still have that bone to contend with you

 

You sure as hell do. If you want to send your sons and daughters to die for us.....we'll call it even. We could use the help right about now.

Fri, 12/28/2012 - 09:28 | 3101252 Ghordius
Ghordius's picture

not funny. our boyz and girlz are this very moment in Afghanistan, a war chosen by Bush II

fact is your military-industrial complex fumes whenever things like this are necessary

I bet 99.9% of all US Citizens are not aware of our troops helping, or that Germany had to amend it's constitution in order to do it, instead of just footing the bills as for the Gulf Wars

Fri, 12/28/2012 - 09:37 | 3101268 GetZeeGold
GetZeeGold's picture

 

 

Like Clinton didn't start it.

Fri, 12/28/2012 - 09:42 | 3101274 Ghordius
Ghordius's picture

you mean let's go back to Reagan and his Stinger missiles?

Fri, 12/28/2012 - 09:51 | 3101299 GetZeeGold
GetZeeGold's picture

 

 

Perhaps we should bring up JFK and his police action in some country no one had ever heard of........yet.

Fri, 12/28/2012 - 09:19 | 3101242 Ghordius
Ghordius's picture

"If this gets really bad we're not going to count on support from you..."

who says that? you? or we? this is roughly about the same thing that "you guys" still don't understand why "we guys" are still not throwing a couple of countries like Greece et al under the bus

of course in order to help you would have to be willing to be helped, and we are not there

Fri, 12/28/2012 - 09:20 | 3101245 GetZeeGold
GetZeeGold's picture

 

 

Is it just me.....or is there an echo in this room?

Fri, 12/28/2012 - 08:17 | 3101168 Ghordius
Ghordius's picture

fiscal cliff explained by a dummy for dummies:

the US gov is composed by two houses and one prez from two parties

all sides want the fiscal cliff and would like to blame the others for it

after that all can then "fix" the situation and look like heroes for it

Fri, 12/28/2012 - 09:15 | 3101235 SKY85hawk
SKY85hawk's picture

I agree,  In the past, the new President would move to solve America’s problems in the beginning of his term. He then hoped that voters would forget the pain before the next election cranked up.

 

This time nobody 'remembers' who started the fiscal adjustments, so nobody can be blamed for pain from changes that are actually necessary. 

For once Congress DID THEIR JOB!

Very clever!

The100 billion dollar cut in DISCRETIONARY spending will not affect the social safety Net.

It will affect lots of 'non-essential' govt employees (Clinton once said 98%).

I suspect all these sound bites are coming from people that don't want to suffer like the rest of us have.

 

Fri, 12/28/2012 - 08:26 | 3101171 espirit
espirit's picture

$INDU... must... close... above... MA(50)...

Jees, this gets tiring. Pass the koolaid please.

(as in roid pleaser).

Fri, 12/28/2012 - 08:19 | 3101172 Debugas
Debugas's picture

insider trading heaven

Fri, 12/28/2012 - 08:23 | 3101176 GetZeeGold
GetZeeGold's picture

 

 

That's why we have the SEC and CFTC.

Fri, 12/28/2012 - 10:03 | 3101323 GetZeeGold
GetZeeGold's picture

 

 

On second thought that was so stupid.....I voted myself down.

Fri, 12/28/2012 - 08:28 | 3101181 Element
Element's picture

Bring on nancy, I need a good laugh.

Fri, 12/28/2012 - 08:33 | 3101185 GetZeeGold
GetZeeGold's picture

 

 

Oh crap.....I was worrying about everyone else. I didn't notice Nancy taking up a flanking position.

Fri, 12/28/2012 - 09:10 | 3101227 Element
Element's picture

Man she just sneaks in with that grimace and those dead eyes and starts talking pure gobbledygook and completely lays waste to whatever sensible stuff was happening. She's got a very special gift.

Fri, 12/28/2012 - 08:28 | 3101182 PUD
PUD's picture

Let's be honest here...The "market" is, was and always will be a casino pyramid scheme. For decades it has been driven by demographics, tax policy designed to feed it (ira, 401k etc) fraud, leverage, money printing and greed. Since when is a 3x inverse etf an "investment"? Or options or retail futures or any of the hundreds of invented casino games? Since when is an "investment" measured in minute or second holding time? Since when does one need an online brokerage to make an "investment"? HFT is "investing"? Since when is being a lender to a government being an "investor"? Since when is buying junk bonds, distressed debt, credit default swaps etc "investing"?

It is all a lie. All of it. Propaganda, a con, a farce and a fraud. It is, was and always will be (until it finally and gratefully implodes) gambling, speculating and for the most part, coin flipping. Fucking with commodities..food stuffs, energy etc from your living room in your underwear is "investing"? Daytrading? Straddles, strangles and iron condors are "investing"?  Ha!

It's a ponzi pyramid scheme...the largest industry on the planet! Manipulation and movement of phantom money. It's a disease, cancer, a malignant tumor on the face of humanity and for my part, I can't wait until it's dead

Fri, 12/28/2012 - 09:14 | 3101233 Alcoholic Nativ...
Alcoholic Native American's picture

+1  Capitalism does indeed suck.  End the monopoly game already.

Fri, 12/28/2012 - 08:36 | 3101188 n.d.v.
n.d.v.'s picture

If the market is so "utterly predictable", why isn't everyone making a ridiculous killing?

Fri, 12/28/2012 - 08:57 | 3101204 Dr Benway
Dr Benway's picture

The "what" is predictable, the "when" is not

 

I can absolutely 100% guarantee you that any specific Ponzi scheme or chain letter will collapse, but I can't tell you exactly when

Fri, 12/28/2012 - 09:11 | 3101228 Element
Element's picture

Dude, they are.

Fri, 12/28/2012 - 09:58 | 3101315 SuperDeDuper
SuperDeDuper's picture

I've made so much money I can hardly fit it into my mattress!  Short the market til 10:30, go long til 3:30 then sell it before the close! Works 9 out of 10 times! Make money and party!

Fri, 12/28/2012 - 08:39 | 3101192 tallen
tallen's picture

Pump and Dump!

Fri, 12/28/2012 - 08:42 | 3101197 Quinvarius
Quinvarius's picture

Peter Schiff is about to be completely right.

Fri, 12/28/2012 - 08:52 | 3101203 Seasmoke
Seasmoke's picture

Traitors are everywhere. Too many to count. All roads lead back to Israel.

Fri, 12/28/2012 - 09:02 | 3101213 GetZeeGold
GetZeeGold's picture

 

 

To get out they had to cross the Caucasus Mountains.

 

My drivers license lists me as a Caucasin......not sure if there is a connection there.

Fri, 12/28/2012 - 09:03 | 3101215 youngman
youngman's picture

The later it goes on...the less it will be...worthless....big headlines but no substance...

Fri, 12/28/2012 - 11:00 | 3101508 Elmer Fudd
Elmer Fudd's picture

I lay odds this fiscal cliff farce wont even slow down the debt ceiling issue.

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