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Exposing A Bifurcated Europe

Tyler Durden's picture


While Chinese economic data seems designed to blow minds in its Schrodinger-like good/bad oscillation at the same time, it seems Europe's investors have now taken up the mantle. There is ammunition across every asset class to suggest all is well and things are progressing yet at the same time that risk is rearing its ugly head and momentum is fading. On the bright side, Swiss 2Y rates are at +4bps (having surged 25bps this year) and are back at 'normal' 10-month high rates; European stocks pushed 1-2% higher on the week; Europe's VIX dropped; and EURUSD gained over 1% (not necessarily a positive but seemingly signaling to the world that all is well) mostly in the last 24 hours. The LTRO repayment has pushed EONIA swaps up to six-month highs (liquidity needs remain high - though normalizing) but European credit markets are absolutely not playing along. European corporate and financial credit spreads pushed notably wider on the week and are grossly divergent from stocks now on the year. At the same time, European sovereign spreads ended the week practically unchanged - dislocated from EURUSD exuberance. Europe remains spellbound by the promise of OMT yet the very markets that benefit from that promise are losing their momentum...


European Sovereigns did nothing this week...


but stocks surged more...


But credit markets are telling a very different story...


and EURUSD is rallying BUT is that because banks need the EUR liquidity back home?


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Fri, 01/25/2013 - 12:46 | Link to Comment derek_vineyard
derek_vineyard's picture

tyler---all these short term divergences are rectified eventually on the long term charts you post. these are great for an arb play. but long term...the fed makes the rules and you have to play their game.

Fri, 01/25/2013 - 12:46 | Link to Comment unrulian
unrulian's picture

we need to bifucate some banksters

Fri, 01/25/2013 - 13:07 | Link to Comment francis_sawyer
francis_sawyer's picture

I keep forgetting whose turn is it to row off the edge of the flat earth...

Fri, 01/25/2013 - 13:08 | Link to Comment Glass Seagull
Glass Seagull's picture


Krauts getting sick and tired of this EUR rally cramping their (export) style.  

Fri, 01/25/2013 - 13:09 | Link to Comment IridiumRebel
IridiumRebel's picture

Anyone else experience a ZH nonresponsive site? It was down in my neck of the woods for about a half hour.....I went into a sweaty fit and vomitted a little in my mouth as I was forced to get "news" from MSM sources.....

Fri, 01/25/2013 - 13:12 | Link to Comment Dr. Engali
Dr. Engali's picture

I couldn't get on the Hedge for a while, I kind of expected the black helicopters to start swooping in.

Fri, 01/25/2013 - 13:13 | Link to Comment IridiumRebel
IridiumRebel's picture

Ok......I was about to get the "Oh Shit! Box" for the bugout.........

Fri, 01/25/2013 - 13:17 | Link to Comment Dr. Engali
Dr. Engali's picture

Kind of scary how quickly we can be left in the dark.

Fri, 01/25/2013 - 13:22 | Link to Comment TruthInSunshine
TruthInSunshine's picture

ZH was probably attacked by some Stellar Wind or something along those lines, but she girds her servers well and rolls in mysterious ways, fortunately.

Fri, 01/25/2013 - 13:25 | Link to Comment IridiumRebel
IridiumRebel's picture

wherer would one go in case of the worst case scenario? any good sites?

Fri, 01/25/2013 - 13:29 | Link to Comment francis_sawyer
francis_sawyer's picture

This will be the only site left standing in the end...


Fri, 01/25/2013 - 13:23 | Link to Comment IridiumRebel
IridiumRebel's picture

Yes, but at least we and those here understand this potential. The drooling masses do not. I am not scared of any blackout. My Sandy experience was more vacation like and proved to Mrs. IridiumRebel that her "man" has shit under control. I worry about the drooling masses. It's cool. Gun Control will keep them from storming the gates of my compound. 

Fri, 01/25/2013 - 13:33 | Link to Comment unrulian
unrulian's picture

So it wasn't just me ....phew....taking off armour...putting away flir...decocking sig

Fri, 01/25/2013 - 13:41 | Link to Comment IridiumRebel
IridiumRebel's picture

Oh man.....awesome post. +1000

Fri, 01/25/2013 - 13:26 | Link to Comment Never One Roach
Never One Roach's picture

Thanks for the info. I feel much better now that all is well.

Fri, 01/25/2013 - 13:27 | Link to Comment IridiumRebel
IridiumRebel's picture

...back to the task at hand......British folks are having a good 'ol time.


Fri, 01/25/2013 - 13:56 | Link to Comment HoaX
HoaX's picture

Least they´re not using the Euro huh?

Fri, 01/25/2013 - 14:42 | Link to Comment SheepDog-One
SheepDog-One's picture

AH what it's really all about is 'shit waves'....they love stocks and bonds, but they hate credit more. 

shit waves - YouTube

Fri, 01/25/2013 - 14:57 | Link to Comment TrumpXVI
TrumpXVI's picture

Okay, sooooo in a Schroedinger World everything can inhabit two totally different states at the same time UNTIL an observation is made.

How am I doin'?

Soooo, what "observation" do we need to make in order to collapse this goddamn wave function here, dammit?  Hasn't this bullshit been going on long enough?

Fri, 01/25/2013 - 15:04 | Link to Comment Dareconomics
Dareconomics's picture

Since the msm thinks that repaying the loans is a sign of strength, there is an incentive to repay the loans to spin perception. Of course, the banks still need to do a lot of deleveraging:

Fri, 01/25/2013 - 16:01 | Link to Comment HoaX
HoaX's picture

I´m sorry, but actually repaying loans is a sign of weakness in your books?

Just making sure I get your story straight here.

Fri, 01/25/2013 - 17:55 | Link to Comment dvsteenk
dvsteenk's picture

sharp rises in non-peripheral european short-term bonds since beginning of January, accelerating... did ECB release their hold?

also 10yr US... up 5% to 1.94% today


Sat, 01/26/2013 - 01:53 | Link to Comment nastaking
nastaking's picture

Sony has revealed more details about its newly unveiled ZTE V889F Z Android smartphone

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