The Honey Badger Market Grinds Higher

Tyler Durden's picture

The honey badger ramp continues, once more driven entirely by the USD carry as both the EURUSD and USDJPY hit new highs (14 month and 3 year, respectively). The EUR took another major leg higher following today's second ECB refinancing operation in two days, a 3 month LTRO, in which just €3.71 billion was allotted to some 46 bidders, far less than the €10 billion expected particularly in the context of the €6 billion the matured, leading to further Euribor curve steepening, more non-expansion of the ECB balance sheet, and a surge in the EURUSD to new post-2011 highs of 1.3560. But if it wasn't this it would be something else. Elsewhere we got the final official Spanish GDP number, which as previously reported once again came worse than expected at -0.7%, compared to expectations of -0.6%, and -1.8% Y/Y vs Exp. -1.7%. But once again we are told to ignore current reality and look with optimism to the future as various European confidence indices posted higher than expected prints. This seems logical: when the ugly fundamentals don't matter, one must at least pretend there is hope they will improve in the future to serve as a buying catalyst. Finally, and what the surging EUR and crushed exports are all about, Italy sold some €6.5 billion in 5 and 10 year BTPs at yields of 2.94% and 4.17%, both respectively lower than the prior auctions of 3.26% and 4.48%.

And while it would be easy to assume that the relentless rise in the EUR and plunge in the JPY are free lunches, there is no such thing. In fact even Goldman is now warning that the relentless march higher in the EURUSD will soon attract the attention of the ECB. In a note overnight by Goldman's Dirk Schumacher, he said that "one risk factor for the economic outlook is the exchange rate. The trade-weighted Euro has appreciated by 2.5% since the beginning of this year and by almost 5% since the announcement of the OMT in September.... a further strengthening at a similar same pace to what we have observed in recent months would eventually weigh more meaningfully on the economy, and this in turn would lead to a change in the “medium-term outlook for price stability”. The ECB, we think, would react in this case by cutting rates, in an attempt to slow the upward momentum of the exchange rate."

This was reinforced moments ago by the French industry minister who said that the EUR exchange rate is too strong. Well, then, just complain the Monte Paschi supervisor extraordinaire Mario Draghi and ask him to stop his backdoor bailout of the PIIGS: watch the EURUSD regain its "export-boosting" fair value then. Oh, wait, redenomination risk...

As for the plunge in the Yen, well the one nation that shut down all of its nukes, and now has to import its energy with a collapsing currency already has felt the 3% inflation in gas prices in 2 months as reported previously. Once this number hits 10% in a few more weeks, we doubt there will be much enthusiasm left for Abe's masterplan.

Today's two key events are the first US Q4 GDP report and the FOMC statement. If Bernanke even so much as hints at pulling the punchbowl, as he kinda, sorta did last time, watch out below.

The full overnight symmary is from DB's Jim Reid

The equity market continues to be in better health than me with the S&P 500 (+0.51%) up for the 9th day in 10 with only Monday’s (-0.18% spoiling the perfect 10). Interestingly over the same 10-day period US CDX IG has only tightened from 89bp to 86bp with Crossover, Main and Senior Financials actually +8bp, +5bp and +9bp wider over the same period. In cash credit while iBoxx $ Corporate BBB spreads are virtually unchanged, iBoxx € Corporates have widened by +15bp. So equities are starting to outperform credit. Credit has been a relative underperformer partly due to the emergence of event risks with the TMT being impacted by LBO chatter on both sides of the Atlantic. There is also some indigestion on new supply but there is also a valuation argument out there that spreads (especially on low beta names) are too tight and offer little cushion against rate rises. So it’s worth keeping an eye on credit as it’s not fully joining the risk-on party at the moment.

Looking ahead, today will be a pretty busy day. We have the first cut of the Q4 US GDP number with the market expecting a sharp drop to 1.1% from 3.1% previously. Much of the impact is likely to be driven by a slowdown in inventory building which is partly due to Hurricane Sandy. We also have the ADP employment report today ahead of Friday’s payrolls report. The FOMC statement is due at 7.15pm London time today. While no significant policy changes are expected Peter Hooper thinks the meeting itself offers an opportunity to have an important discussion about what signals might be given on the likely longevity of the current QE policy. The results of this discussion will likely appear in the minutes in three weeks time and/or in a variety of upcoming Fedspeak. There is no press conference today which lessons the immediate information flow.

In Europe we also have the first reading of Spain’s Q4 GDP and a handful of confidence surveys from the Eurozone. The market is expecting further shrinkage in the Spanish economy (-0.6% QoQ v -0.3% previously) but the confidence surveys are expected to be largely flat to a tad better in January. The ECB’s Weidmann will speak in Berlin today after the European market close while PM Monti will also give a speech in Brussels after Europe goes home.

Back to markets, the risk-positive session yesterday also led to a further rise in Treasury yields with the 10-year closing at 1.99% on the day. The mood was largely lifted by what was again another positive day of earnings which helped offset a mediocre set of US data. Indeed 18 out of the 25 companies that reported yesterday came ahead relative to EPS consensus. Revenue performance was also impressive with just 4 of those falling short of estimates. Notably Amazon’s shares traded nearly 12% higher in extended hours trading as the market welcomed the operating margin expansion in its North American business.

On the data front the Case-Shiller home price index (5.52% yoy v 5.55% yoy expected) was a little softer than expected whilst the Conference Board Consumer Confidence survey (58.6 v 64.0 expected) fell to the lowest level since November 2011.

Moving on to the overnight session Asian equity markets are largely on the front foot with the Nikkei, Hang Seng and the KOSPI +1.8%, +0.7% and +0.4% higher, respectively. The Nikkei is trading at its highest since April 2010 with the strength overnight fuelled by further weakness in the Yen. In Asian credit, new issues remain the focus although the Australian iTraxx is 2bp wider at 117.5bp as we go to print. In commodities, Copper is up for the third consecutive day while Gold is up for the second straight session at $1667/oz. The UST 10-year yield has edged a tad higher again overnight and is currently at 2.01%.

Updating some European news flow before we wrap up, EU’s Olli Rehn told a press conference yesterday that EU officials will make a decision on the best pace for Spain’s budget consolidation when they deliver a scheduled assessment of the program next month. Rehn said that if there has been a serious deterioration in the economy, we can propose an extension of a country’s adjustment path. Staying in Europe, S&P has kept Belgium’s AA rating on negative outlook reflecting downside risks to the rating if the country’s economic or budgetary performance disappoints sharply relative to the agency’s forecasts.

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Zer0head's picture

nice little badger

stocktivity's picture

It's all Bullshit! Just a new day...Rally on.

GetZeeGold's picture



Mmmm.......honey sauce. The high fructose substitute.

Lohn Jocke's picture

Honey Badger doesn't give a fuck. Honey Badger takes what it wants... Bitchez.

Zer0head's picture

This AM Tom Keene has only been talking about FaceBook as he and Sara play footsie under the desk expounding on that creepy Graph Search thing.

Actually I was wrong he mentioned he saw Michael Dell in Davos, and for the benefit of all of his viewers paused to say "Good Mornining Mr. Dell"


I only watch BBG because it is free. It is now worse than CNBS ever was.

Orly's picture

Whatever happened to Bernie?

overmedicatedundersexed's picture

I will post when I give up my short positions, as a die hard, that will be the top and then all hell will break loose, it feels great to have such power, but  like so many, I  will never benefit from the drop.

razorthin's picture

Tom Keane is underrated as a pompous, keynesian ass.

mightycluck's picture

Speaking of badgers, I am going to hear this guy speak this morning. He appears on CNBC with Rick Santelli talking about soft housing numbers. His brief presentation is here in case you want to see it:

Silverhog's picture

Market don't give a shit.

firstdivision's picture

*Looks at EURUSD* Ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha!

*Looks at WTI* Ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha!

This market is about to roll over and head south unless the Fed increases their monthly gift giving to banks.

LongSoupLine's picture

What the Fuck...


I haven't even stopped puking from yesterday yet.


Fuck you Bernanke.  prick.

q99x2's picture

Bernanke's goin a print. Got the bubble in a sweat spot. Can play music by rubbing its surface and working the fiat pedal. Dats a happy badger.

Albertarocks's picture

The funniest Crazy Nastyass Honey Badger video you'll find anywhere.  A bit off topic and I apologize for that but it's just so funny I had to share it.

Dr. Engali's picture

My kid showed me that video, they thought it was funnier than hell. Now I'm driving them to school they act like they are honey badgers.

Ralph Spoilsport's picture

Kids would think it's funny but this "gay-narrator" meme was tired before it became a meme.

kridkrid's picture

It's not a meme, it's a guy with a schtick. Lighten up, Francis.

Mi Naem's picture

Great video, but that narrator has got to go.  Too much flamboyant flaming distracted from the vid. 

"Eeww, that's so nasty, eewwwe, yuck!" like a little girl being given a frog by her hapless but aspiring boyfriend. 

slaughterer's picture

The gay narrator makes it even more funny, IMO.

THE DORK OF CORK's picture

The price of the euro against the $ is now not really that important.

Its not really important because the euro is not a currency.

As it now cannot be used as a efficient medium of exchange.............



The Euro prevents countries from paying labour ...........


It is not a state money token.

Its was a capital token.


Now it is worse then that.

It is a capital token that cannot be used.


Tranvia Jaen in Southern Spain

Not operational because the local authorties do not have the money to pay Labour.........

Despite the fact it was running with passengers during a trial period almost 2 years ago.


The cost of capital (oil flowing into machines) much therefore rise.

Crushing these economies into dust.


Domestic demand is decreasing all of the time in these countries.

The Euro is in the business of extraction.


Internal commerce / movement  - the business of life is sacrificed for Grot exports to some other grot country so as to afford oil that cannot even be used now........





falak pema's picture

so the short brigade is going to make a killing shorting the totem token which is hokum pokum. 

Musical chairs go on, as soon as the Euro falls the cry will go up, I want my Yen lower and my dollar to go schuss, bitchez! 

DIchotomy of currency game : it saves the bonds and kills the exporters when it goes up! 

Can have your cake...and eat it. Come on those can can girls! 

Catullus's picture

Catalonia asking for more bailout money. 9bn EUR this time.  Up from 5 bn last.  They'll ask for 18bn EUR in July

Ghordius's picture

not bad for a Spanish region that wants to be an independent nation, eh? and yet a member of the EU and of the eurozone

Stuntgirl's picture

And yet ramping up the independence thing. What?

GetZeeGold's picture



They should send them a trophy with the next allowance.

espirit's picture

Pretty much like a bad child.  What are you going to do?  Withhold their allowance?

Appease them to keep the ponzi going for a while longer. 

Ghordius's picture

it's funny, eh? they feel they aren't Spaniards, but Catalonians and Europeans. And they don't want to give up the EUR

the funniest of all is that they don't even want a Republic of Catalonia. It would be the Kingdom of Catalonia.

Joan Carles I, in Catalan, who would have to just adjust slightly his "style" into:

"His Majesty Juan Carlos the First, By the Grace of God,the King of Spain, King of Castile, of Catalonia, of León, of Aragon, of the Two Sicilies, of Jerusalem, of Navarre, of Granada, of Seville, of Toledo, of Valencia, of Galicia, of Sardinia, of Córdoba, of Corsica, of Murcia, of Jaén, of the Algarves, of Algeciras, of Gibraltar, of the Canary Islands, of the East and West Indies, of the Islands and Mainland of the Ocean Sea; Archduke of Austria; Duke of Burgundy, of Brabant, of Milan, of Athens and Neopatria; Count of Habsburg, of Flanders, of Tyrol, of Roussillon, and of Barcelona; Lord of Biscay and of Molina de Aragón; Captain General and Supreme Commander of the Royal Armed Forces; Sovereign Grand Master of the Order of the Golden Fleece and of the orders awarded by the Spanish and Catalonian states"

GetZeeGold's picture



You can just call him Bob for short.

Ghordius's picture

you mean Juanito - this would be Johnny

HoaX's picture

Sovereign Grand Master of the Order of the Golden Fleece

Wonder if we can make Bernank honorary member.

Ghordius's picture

nah, the collar and the order are made out of gold. you know that Oncle Ben would never touch such a barbaric item

HoaX's picture

My bad, I thought the order was about fleecing gold, not golden sheepskins.

kridkrid's picture

Something quite mathematical about those figures... Can't... Put my... Finger... On it.

Itch's picture

This Eur/Yen trade is insatiable, its making me giddy. Its one of those” slap yourself" trades as well, because you could have bet the house on it (congrats to those who did) and no one would have squeezed you even a little bit. Bid after bid after bid, bubbling away like a little pot of hyperinflation stew. 

Zgangsta's picture

Honey badger just takes what it wants.

razorthin's picture

EEEEWWW what's that, a cobra threatening a bear raid?  Disgusting!

Whiteshadowmovement's picture

Im taking orders now for "Tom Stolper finally got one" t-shirts. Only 140 pips to go and we can finally determine scientifically if a broken clock truly is right twice a day

WTFUD's picture

If i were a rich man i would. . . .all day long i'd . . .if i was a wealthy man!
but i'm not so i wont.

and in the backroom Ben( the Printer ) was everybodys darling, a hussle here and a hussle there. . . i said heh Ben take a walk on the wildside. . . and all the parasites sang, do dodo dodo dododo do. . .

He's a rocket ship on his way to mars on a collision course . . . .he's a print machine ready to reload, like an atom bomb he's gonna woah woah woah woah woah Explode. . .

THE DORK OF CORK's picture

Imagine you use a currency which prevents rational local & national trade.


You must manically  export to afford (energy) inputs that you cannot afford..............


Its no coincidence that French wine consumption tanked during the Euro years.


The Euro is a gigantic capital export engine.........


It now needs European domestic demand to feed its shadow banking black hole.



TrumpXVI's picture

Honey Badger don't care 'bout Zero Hedge.

THE DORK OF CORK's picture

Running out of fuel in Naples..............


Its public transport company has gone dry.



30/01/2013 Service unsecured
We inform our esteemed clientele that the 1/30/2013 morning, low fuel, the service is not guaranteed.


We inform our esteemed clientele that due to unavailability of fuel irregularities of Phlegraean area, Chiaia, Vomero. We apologize for any inconvenience

Clayton Bigsby's picture

Honey Badger doesn't give a shit....