Rajoy Summarizes Overnight (And Recurring) Sentiment: "There Are No Green Shoots, There Is No Spring"

Tyler Durden's picture

In the aftermath of yesterday's surge in German hopium measured by the ZEW Economic Survey which took out all expectations to the upside, it was inevitable that the other double-dipping country, France, telegraphed some optimism despite a contracting economy and would follow suit with a big  confidence beat, and sure enough the French INSEE reported that February business sentiment rose from 87 to 90, on expectations of an unchanged number. And the subsequent prompt smash of investor expectations in Switzerland, where the ZEW soared from -6.9 to +10.0 tells us that something is very wrong in the Alpine country if it too is trying so hard to distract from the here and now. And while one can manipulate future optimism metrics to infinity, it is reality that is proving far more troublesome for Europe, as could be seen by the Italian Industrial Orders print which crashed -15.3% Y/Y on expectations of a smooth -9.5% drop, down from -6.7% previously. Since industrial orders are a proxy for future demand, a critical issue as Italy enters 2013 after six consecutive quarters of economic contraction and with no relief on the horizon, it is only fitting that Italy should shock the world with an off the chart confidence beat next.

In bond news, Spain said it would impose a yield ceiling on new bond sales by region, even as it prepared to launch new 5 year benchmark USD denominated bonds: there was a time when Europe was the US' dumb money. How quickly things have flipped. And while Spain was being bid, Germany was not, and following today's 10 Year Bund auction the 10 year yield rose another 5 bps to 1.67%.

Finally, in a rare moment of reality, Spanish PM Rajoy said at the State of the Nation debate. “It is not enough, there are no green shoots, there is no spring,” adding that Spain’s
economic situation is "terribly hard." It was confusing that this being corruption scandal-ridden Rajoy, he did not add that "except for all that things that are terrible, things are doing great." The US does it day after day.

Some more overnight highlights via BBG:

  • New Zealand’s central bank governor said he’s ready to intervene in foreign-exchange markets, the latest in a string of countries from South Korea to Brazil warning their currencies are too strong
  • Japan’s Abe will be accompanied by his top currency official when he visits the U.S. to meet with Obama, as Japan tries to limit international friction over a weakening yen
  • Spain is imposing yield limits on debt sales by its 17 semi-autonomous regions that would shut most of them out of markets in an effort to curb the country’s borrowing, two people familiar with the matter said
  • Bank of England officials considered options including a rate cut and expanding the range of assets purchased at their February meeting
  • FOMC minutes to be released today won’t suggest Fed is ready to slow $85b/month pace of Treasury and MBS purchases, DB said yesterday
  • U.K. jobless claims fell more than twice as much as forecast in January as job creation surged
  • BofAML Corporate Master Index OAS holds at 147bps as $10.05b priced yesterday. Markit IG at 85bps, matching YTD low. High Yield Master II OAS narrows 3bps to 492bps; $1b priced Tuesday. CDX High Yield gains to 102.86
  • Nikkei rises 0.8%%. Germany’s DAX lower, FTSE higher. U.S.  equity-index futures rise. Italian and Spanish bonds gain, bunds and gilts fall. Energy, previous metals mostly lower

A recap of European markets:

  • Spanish 10Y yield down 4bps to 5.16%
  • Italian 10Y yield down 2bps to 4.38%
  • U.K. 10Y yield up 2bps to 2.2%
  • German 10Y yield up 4bps to 1.67%
  • Bund future down 0.32% to 142.36
  • BTP future up 0.2% to 112.37
  • EUR/USD up 0.06% to $1.3396
  • Dollar Index up 0.06% to 80.51
  • Sterling spot down 0.76% to $1.5308
  • 1Y euro cross currency basis swap up 1bp to -19bps
  • Stoxx 600 down 0.15% to 289.58

A more detailed recap from DB

The market yesterday caught the mood of the London weather as Europe had one of its best days this year. The DAX and CAC added +1.62% and +1.88% respectively, only second to the +2.19% and +2.55% rally on the first day of 2013. In the US we saw the S&P 500 (+0.73%) hit fresh 5 year highs whilst the Dow Jones also reached a new cyclical high at 14035. The VIX index fell further to 12.31 reaching the lowest close since April 2007. Treasuries had a softer session with the 10-year yield creeping back above 2% helped by some chatter that the FOMC minutes later today will shed some light on the timing of stimulus withdrawal.

The stronger-than-expected German ZEW Economic Sentiment survey (48.2 v 35.0) was cited as the main catalyst of yesterday’s moves, which helped cushion a mildly disappointing NAHB housing market headline in the US (46 v 48). The main event at the end of the week, namely the Italian elections, are hardly being discussed. We thought that the prospect of them and the associated uncertainty would encourage some risk reversal in February before a March rebound after a pro-reform coalition was formed. However although many risk assets have been treading water in February it’s still net net been a better month than we expected. Tomorrow's flash PMIs in Europe (and elsewhere) are the next main hurdle. A continued steady improvement will support risk further.

Back to markets, Asian equities are trading with a firm tone, helped by the positive US lead. Overnight gains are being led by the ASX200 +0.33%), Hang Seng (+0.15%) and KOSPI (+1.76%). The Nikkei is up 0.72% and the yen is marginally stronger (+0.3%) against the dollar in overnight trading on relatively limited news flow. The Yen showed some weakness initially after Japan’s January trade deficit came in at a record JPY1.63trn, driven by higher than expected imports (+7.3%yoy vs 2.1% expected) – no doubt driven to some extent by the yen’s recent depreciation. The 'J-curve' analysis from A-Level Economics is flooding back into memory. Asian credit spreads are tighter as technicals are now better following a large bond redemption with supply generally being more subdued than expected.

Briefly returning to US markets, investors have been mulling the return of M&A activity. Indeed $158bn in deals have been announced in the year-to-date, which is more than double the activity in the same period last year according to Reuters data. Office Depot and OfficeMax are the latest companies in the M&A spotlight with reports suggesting that two companies are in discussions to merge (Bloomberg).

With the US spending sequesters scheduled to come into effect in a matter of days, Obama held a press conference yesterday to turn up the pressure on the GOP to accept his alternative deficit-reduction plan that includes both spending cuts and new revenues through closing tax loopholes. Obama will reportedly hit the road again next week for campaign-style events to build support for his plan. Also yesterday, Democrat Erskine Bowles and Republican Alan Simpson released a “version 2” of their deficit reduction plan calling for a reduction in government spending of $2.4trn over 10 years. Deficit reductions would come from lower payments to Medicare and Medicaid providers and higher Medicare premiums for top earners. Additional savings would come from using a “chained-CPI” gauge in Social Security cost-of-living payments. On the revenue side, a series of tax exemptions and deductions will be removed with part of the savings used for deficit reduction and the rest to reduce income tax rates (Bloomberg). Simpson and Bowles remained pessimistic about the chances of avoiding the sequester however, reflecting the general mood in both the Democrat and Republican camps.

Turning to the day ahead, the Bank of England will be releasing minutes from their last meeting. The UK’s latest labour report is also scheduled today. In the US, the focus will be on the FOMC minutes which will be closely examined in light of the recent discussions on the appropriate timing to reduce asset purchases. In terms of US data, January housing starts, building permits and PPI are the main highlights.

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GetZeeGold's picture



This is not a test.....we're live.

Boris Alatovkrap's picture

Ivory Tower elitist is play with economy for to test theories, and when is screw up, change theory, but people is starve and die. Russian people is learn same lesson from Lysenko. Why is Amerika and West Europe so f-ing stupid!?

Mongo's picture

There is only Ponzi

Boris Alatovkrap's picture

Boris is steal signal from neighbor satellite dish in 70's and remember Happy Days!

e-recep's picture

gold is being hammered hard as we speak.

GetZeeGold's picture



Vae victis. Veni vidi vici!

LongBalls's picture

Gold to $1550 silver to $26.50. Keep your powder dry.

mayhem_korner's picture



Too late.  Already placed my regular, monthly order - 2 sleeves of Ag maples, $1K of Australian dollars, per plan.  Haven't missed a planned buy in 23 months; "price" is irrelevant.

GetZeeGold's picture



Tad early.....but you might have just nailed it.

mayhem_korner's picture



I never worry about early or late pricewise - that's a fool's errand.  I measure my PM position in height.

mayhem_korner's picture



Tom-ay-to.  Tom-ahh-to.

(there's some satisfaction in being able to declare holdings in "metres", tho...)

CH1's picture

Oddly enough, it's when gold bugs quit that the bottom appears.

But, who knows; this is all manipulation, all the time.

Keep stacking.

MFLTucson's picture

Hey LongBalls- What are the fundamentals you are using to make these projections or are you just pulling them out of your ass as I suspect?

Non Passaran's picture

I'm a low risk kind of guy. I keep buying on way down.
By 1550 and 27 I'll be done.

If it goes below, I'll take a loan and buy more.
It's simple.

mayhem_korner's picture



Paper gold is being hammered.  It's a must if the Ponzi puppet-masters are to keep the drive-bys looking away from the 30-car pile up that is the global financial situation.  Funny that my phyzz looks the same as it did when paper gold was 900 and the same as when it was 1,900.

Handful of Dust's picture
Bulgarian government resigns amid growing protests


SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after violent nationwide protests against high power prices, joining a long list of European administrations felled by austerity during Europe's debt crisis.



JustObserving's picture

Gold and silver down as usual as US debts and unfunded liabilities increase by $23 billion a day while Bernanke prints $3 billion a day.

Another beautiful day in the neighborhood.



Bahamas's picture

JustObserving: "Gold and silver down"

you have to bend before you jump!  

LongBalls's picture

This shit is for the schizophrenic. Peace out. My money is on the sidelines for awhile.

Bahamas's picture

If you shoot green, see a good urologist.

espirit's picture

Unless it's "green chutes", then a proctologist would be a better choice.

jover's picture

i remember the reaction of gold to the first QE, +10% first day and +xx% during that up leg.

Now, i dont know what to think of it...

Still, im holding. This is al bullshit. MOPE

GetZeeGold's picture



If you had the unlimited power to create money and you didn't want everyone to know how bad if actually was......what would you do?


It only works for a little while however....and there are always consequences. As always the masses lose and the few....make out like bandits.

JustObserving's picture

The Fed wised up to the rise in gold and silver after their QE announcements.  Now they attack gold and silver weeks before their meetings.  Cannot have gold and silver challenge fiat primacy.

LongBalls's picture

Hang tight dude. This smells of complete desperation. They are trying to herd the sheep into stocks. Then slaughter the living shit out of them. Interest rates are the tell which are on the rise albeit small. Come on man. All this money awash in the system and gold is getting hammered? Tax increases kicking in, DOW WAY over bought, debt sequester BS mumbling in D.C., gun control push, CB's buying bulk gold, budget deficits to the moon, currency wars breaking out..........fuck it. Pull your cash and wait. Do nothing till this "shift" shows us which way it's going to toss us.

Rusty Shorts's picture

Wait, what?? you mean you guys didn't see this??


Must Watch! Dump GLD & SLV. By Gregory Mannarino


PeeramidIdeologies's picture

Leveraged Slv and it's inverse have been a fun ride for the past while, but you would have to be crazy to be holding any of these now. The rules are changing, they used to allow the market to move with the fundamentals, but those days have passed. It seems to me the or'derves have been served and it will soon be time for the main course.... Governments.... As most know with that dish, anything goes....

Sudden Debt's picture



q99x2's picture

Gold and Silver to zero. Stocks to the moon. And, I'm a goin fishin.

GetZeeGold's picture



Have fun fishing.....I'm on cleanup duty. Someone has to haul that worthless crap away.

Zer0head's picture

Tom Keene to Sara this AM on the topic of green

"I loved your "green" look yesterday"

Ohh you were watching and on your vacation day

"Sara I just wanted you to know" (actually I was doing something I always wanted to do but it would be in appropriate on set)

"Tom Keene, I'm just glad you're back"



new game's picture

every man and woman for themselves.

i think you know what todo...

Sudden Debt's picture

masterbation across the board?

PMakoi's picture

As the paper fiats are tossed into the air, the masses everywhere will respond by grabbing the US$.  Perceptions are hard to change, as are habits.  USA!  We're the best of the worst!  I went onto gainsville's site yesterday for the first time in a long while... haven't purchased any new PM's since 2011.  Last year, when gold hit my $1630 target, I was about to purchase, but it kept dropping!  I waited too long, and missed that dip.  I'll stay more alert and ready this time.

mayhem_korner's picture



If you have conviction about the paper fiats ultimately failing, why worry about the "price" of PMs.  Just buy them at regular intervals and spare yourself the heartburn.  You won't care so much what you paid for 'em when the time comes.

mayhem_korner's picture

In the US, the focus will be on the FOMC minutes which will be closely examined in light of the recent discussions on the appropriate timing to reduce asset purchases.


Left out the word "TEMPORARILY" between "to" and "reduce" and the phrase "IN ORDER TO SUSTAIN THE ILLUSION OF RECOVERY" after "purchases".

That is all.

El Hosel's picture

Look like the Fed TEMPORARILY allowed the futures to go red... Dow down 4, "shocking".

MFLTucson's picture

Ya mean we were lied too?  I'm shocked!

Sudden Debt's picture


and while we're confessing... your wife? used to be called LOUIS...


From A West Texas Desk's picture

Pee-Test the FED.


They MAY have Overdosed on their Pscych-Medication(s).

Super Broccoli's picture

could it be that if everyone is devaluating then everyone is getting poorer ... except for the central bankers printing the shit out ?

WillyGroper's picture

Jim Rogers - CFR just discussing race to debase on BBG. My gut told me this is leading to a one world currency. It's no wonder TPTB would hammer PM's.

StychoKiller's picture

[quote] Additional savings would come from using a “chained-CPI” gauge in Social Security cost-of-living payments.


Ya don't like the results, change the measurement device(s).

slackrabbit's picture


“It is not enough, there are no green shoots, there is no spring,”

should read

“The bribe is not enough, there are no green shoots, there is no spring,”



Grand Supercycle's picture

Wile E. Coyote sell off is getting closer as SP500 daily & weekly uptrends simultaneously complete a protracted topping process.

It’s taking longer to roll over because daily AND weekly trends are terminating together.

Therefore the resultant downtrend should have good momentum.