US Contraction Sends Europe Lower, US Higher

Tyler Durden's picture

While US equity futures knee-jerked lower on the dismal reality of this morning's GDP print, that dip was rapidly bought pushing equities up near their highs as the day-session opened. However, it appears US gains are Europe's losses as Spanish (and even more so Italian) stocks are plunging today. From Monti Paschi shenanigans to Fiat's dividend (and comments on ongoing EU uncertainty) and from Saipem's slashing their outlook to Seat's rating downgrade - the chart below suggests this is more than just 'fundamental' as Italy's MIB syncs up perfectly with Spain's IBEX and they both start to fall. Spanish and Italian bond markets are unreactive as EUR strengthens... but we haven't seen European stocks and US stocks decouple to this extent this year so far... is the flow becoming fragmented?




and Europe...


and the first time we see all risk-assets decouple this year...

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SilverTree's picture

Say What Again, what exactly do you do to put food on the table?

SilverTree's picture

IDK, you seem like a smart guy. I'm a Mechanical Engineer. 

SilverTree's picture

Derp, I'm not going to ask you to dinner.

otto skorzeny's picture

so am I-when i help the kids with their erector set

Id fight Gandhi's picture

Sorry, meant to say and now locked edit...

All I'm seeing from news outlets is initial shock, now spin that GDP wasn't that bad.

Some even saying it means more fed easing which means good for stocks.

Joe Davola's picture

Ah the tried and true 'good is good, but bad is gooder' poppycock.

insanelysane's picture

Methinks the plan is to push stocks as high as possible so that when reality cannot be ignored a 50% contraction will be 50% of moar.

For the low information readers, a 50% crash at Dow 12,000 is 6,000 whereas the same % crash at Dow 20,000 is 10,000.  Then the propaganda machine can tell us how 10,000 isn't that low.


See BLS and unemployment rate for historical reference.  

BTW, plan on seeing another 5 million or more exit the labor force to keep the rate in the current range of high 7%.

tango's picture

If it had been -45% it would somehow have been presented as positive.  "No way to go but up"  "Seasonal"   "One-time events"  "Weather"  I truly expect sun spots, the flu, yard sales and divorce to be cited in coming weeks.

whatsinaname's picture

Now even if we are in a recession will stocks be able to hold their heads high ? Will this time really be different ?

Cognitive Dissonance's picture

The insanity will continue until morale improves.

<Is Cramer foaming at the mouth yet?>

CrashisOptimistic's picture


So we're at -0.1% and facing about 2% in GDP drag from fiscal sources, and that's before additional spending cuts to be pushed for in the Continuing Resolution.  

What a coincidence.  "How can you want these spending cuts with the economy in such bad shape?  We must cancel the Sequester and maybe have some stimulus spending INCREASES in the CR!!"


CrashisOptimistic's picture


Oh, and has there EVER been better evidence that equities are all HFT driven with no human traders involved?

A GDP miss of 1.2% and the market doesn't care?  Of course it doesn't!  One HFT engine only cares about the actions of another that competes in the arena.  Economic underpinnings are not relevant.

q99x2's picture

This must be proof that if the markets go higher the economy is tanking.

How ya like me now Bernanke.

tango's picture

No, have you forgotten the gripes that the 1400 market under Bush was fake because of "large unemployment" and "middle class problems".  (LOL)  Oddly, one rarely hears that these days.  Instead it's "turnaround", "recovery", "upward momentum" or worse, NPR is running a series of agitprop on how Obama saved the world but has not explained it well....FORWARD

KnightTakesKing's picture

This would never have happened if Sandra Fluke had free contraceptives.

a growing concern's picture

Bareback is a constitutional right, you ignorant Repuglican. Guns? Nope.

swissaustrian's picture

The diversion could be due to the surging EUR/USD rate...

NEOSERF's picture

What's great is that with gas sprinting towards $4/gal again and the 2% hit to SS on payroll, and likely more deals with the March 1 deadline for tax hits, this is just the beginning..Thankfully they are rushing to get the second GDP number for Q4 out the door which will show +0.8% and markets will orgy higher towards 15K

tip e. canoe's picture

Q4 GDP fueled by gun sales

funny shit when you think about it

tango's picture

Thank you.  What folks never seem to grasp is that the FED's money policies raise prices making it impossible for folks to spend spend spend unless (of course) they use credit.  This is the crux of the problem - you can't have a "consumer economy" without discretionary money.  Europe has proved that point over and over.  On the converse if our economy was based on a strong dollar, savings and fiscal responsibility, we wouldn't be having these problems in the first place.

disabledvet's picture

There is a point where the value of all the I'll gotten information approaches zero. right now prices are still capable of manipulation...but as an economy as massive as the USA approaches stall speed the ability to just "throw prices around" simply collapses under the sheer weight of supply. Bond yields are as real as it gets...and while people celebrate low yields as "pumping equities higher" the evidence in fact is overwhelmingly to the contrary. For the record I'm not changing my bullish stance on stocks...but I did bail on the averages two days ago...why I can't say I know really...but other than the war and an UNDERSTANDING of the depression (which is Bernanke's specialty) this time has been totally the same as all the other asset deflations. QE is the antithesis of's a has caused this double needs to be wound down.

otto skorzeny's picture

I'm looking for a HUGE down day-probably 40pts Dow/5pts S&P

falak pema's picture

Young king Henry II of france had a problem of getting a hard on; which was only resolved when his doctor read the teachings of the Oriental sages who found that certain techniques (later codified in the western world as  a whole known as Kama Sutra) detailed this wizardry of ancient carnatha into every days lives of the world. So young Henry got the primer for his own satisifaction back in 1537! In fact he had a whole bunch of kids from then on that created the biggest blood fest France has ever known in civil war culminating in the Saint BArthalemy. 

Maybe there is an analogy there; if the USD could learn the phenix in the joy position and the Euro the reclining horse position we could avoid a premature ejac called financial armageddon in knee jerk currency war. 

And enjoy a true blood fest further down the road. You can't win em all; either you avoid the austerity/sterility wall today  or you avoid the blood fest tomorrow. Thats the lesson of history repeating. 

The worst of both worlds would be to have a currency war today turning into trade war turning into world blood fest.

That way we would be into awesome global triple play! 

My idea of local triple play is to get the cable company to put my internet, my telephone and my TV on the same multi box! 

More peaceful, but then I don't run the FED!

LongSoupLine's picture

It's all a card shuffling pile of fucking stinking shit.

mdtrader's picture

France is in trouble too. Could be a story that might come to the fore in 2013.

Archetype's picture

I have said it before here on ZeroHedge, if you belive the markets are broken Just watch the Swedish OMX-index (the blue one on the second image). Today price action was about the sickest ever, bad earnings totaly ignored and instead bought like there is no tomorrow.


Todays best example is the earnings report in SKF (high beta industrial company, manufacturing bearings)The big crooks is as usual Merill Lynch (MLI) bought before the much lower than estimated result and then even moore afterwards, again and again:

thismarketisrigged's picture

dont worry, with the crooks running our country, nothing can bring our market down. slow growth- na, unemployment near 8- na, bad fed data- na, nothing, a big joke

the grateful unemployed's picture

it's entirely possible the market is rallying on weak economic news, which portends more QE, (anything else, - good econo news - would require serious reallocation), and that this pullback is another dip to buy.

IridiumRebel's picture
You see the Santelli vs LIESman bout today?


Clowns on Acid's picture

GDP = .1% - "What difference does it make ?"

Dems Tout Claim: 'Best-Looking Contraction in U.S. GDP You'll Ever See'
10:56 AM, Jan 30, 2013 • By DANIEL HALPER

In response to the news today that the economy contracted -.1 percent in the final quarter of last year, Democrats are touting the claim that this is "the best-looking contraction in U.S. GDP you'll ever see." The claim was originally made by chief U.S. economist for Capital Economics Paul Ashworth.

"The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging," Ashworth also claimed.

The claim was quickly seized upon by Democrats, looking to share good news about a contracting economy.

Democratic party communications director Brad Woodhouse quickly began spreading the word on Twitter:

thismarketisrigged's picture

i guess the only thing that can bring this market down would be bernanke saying that qe is done, but that wont happen. basically nothing can do anything to bring this down.

gatorengineer's picture

Multiple Choice.


1) blame this on the republicans bringing us to the fiscal cliff.

2) blame hurricane sandy

3) blame Bush

4) create a percieved need for more printing.....

5) fueled by a huge drop in defense spending....create a perception that they need to keep defense spending up so they can fight someone (who doesnt really matter does it?)