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Stocks Surge On Endless Easy Money Promises As Italy Is Long Forgotten

Tyler Durden's picture


Stocks surged their most in 2013 today on slightly above-average volume as the Dow pushed towards its all-time closing highs and Transports went vertical (up 3.5% in Feb). While it no longer matters, it is worth noting that Treasuries and FX markets were not partaking as a broad basket of risk-assets suggests the S&P going out 20 points rich to reality. Materials are stil -1.5% on the month and Staples are leading +2.4%. In the last hour, the S&P even left behind its main driver - VIX - as the 'fear' index could not break below 14.5%. Of most notice today was the fact that equities have retraced all of their losses from the Italian election headlines and recoupled with gold on the week. The high-yield bond ETF HYG rose along with stocks but also notably the underlying HY bond market actually saw selling pressure as HYG's intrinsic value dropped markedly. Late on, trade size rose notably as S&P futures touched the under-side of the 3-month up-trend channel.

Equities and Gold recouple at pre-Italy levels...


Professional activity (h/t @eminiwatch) as we approached the underside of the 3-month uptrend channel...


which is clear in the performance of the Nasdaq at the close...

as even VIX gave up early..


Sectorally, Materials aren't confirming this cycle (and Staples are the big winners in Feb)...


Credit and equity markets moved higher together on the day at the index level but the underlying cash markets did not play along at all... We last saw this disconnect in the last week of Jan when HY began its decline...

Summing up today's equity market action in one chart - th ered line is the S&P 500, the green line represents the performance of Capital Context's CONTEXT model (based on FX, Rates, curves, credit, commodities, and swaps) - it appears equities had quite a day on their own...


Charts: Bloomberg and Capital Context


Bonus Chart: Gold and Stocks have recoupled post-QE2


Bonus Bonus Chart: AAPL had a hell of day... closed at yesterday's VWAP (and who still claims this market is not dominated by machines


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Wed, 02/27/2013 - 17:10 | 3283229 arm50
arm50's picture

bunga bunga

Wed, 02/27/2013 - 17:52 | 3283339 LawsofPhysics
LawsofPhysics's picture

Obamacare isn't even a fucking drop in the bucket.  The world is awash in debt, debt dealers, and debt junkies;


Wed, 02/27/2013 - 18:33 | 3283489 TruthInSunshine
TruthInSunshine's picture

BTFND! (*non-dip)

Wed, 02/27/2013 - 20:56 | 3283958 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Monster short squeze. Shake the money out of the muppets before the real short opportunity hits.

Wed, 02/27/2013 - 17:21 | 3283265 insanelysane
insanelysane's picture

Apparently the dreaded sequester isn't to be dreaded after all.  It must be priced in at +500 at least.

Wed, 02/27/2013 - 17:54 | 3283343 Silver Bug
Silver Bug's picture

QE to infinity, just let the good times roll!

Wed, 02/27/2013 - 18:58 | 3283569 SheepDog-One
SheepDog-One's picture

Yea 'stawks surge'...all the way back to where they were 2 days ago! (not counting JC Penis horror show of course)

Thu, 02/28/2013 - 11:51 | 3285842 markettime
markettime's picture

Chart Porn is the best!

Wed, 02/27/2013 - 17:13 | 3283240 realtick
Wed, 02/27/2013 - 17:16 | 3283248 thismarketisrigged
thismarketisrigged's picture

is there any chance we do not hit the all time high tomorrow? just get it out of the way, its not even impressive anymore. if i was able to print like they do, id be a billionaire as well.

Wed, 02/27/2013 - 18:20 | 3283446 negative rates
negative rates's picture

Nope, it will pull back and thrust over sometime in March, it's was written.

Wed, 02/27/2013 - 17:18 | 3283253 Inthemix96
Inthemix96's picture

Never mind bunga bunga,

these fuckers are cunts.

One and all.


Wed, 02/27/2013 - 17:19 | 3283255 q99x2
q99x2's picture

Market trajectory set to hit +78% by year end as WWIII begins.

Wed, 02/27/2013 - 17:33 | 3283291 JenkinsLane
JenkinsLane's picture

every cloud....

Wed, 02/27/2013 - 17:40 | 3283314 McMolotov
McMolotov's picture

....has a depleted uranium lining?

Thu, 02/28/2013 - 02:01 | 3284763 e-recep
e-recep's picture

cool, i have never been in a nuclear war.

Wed, 02/27/2013 - 17:19 | 3283256 r101958
r101958's picture

All the Fed and central banks care to do, at this point, is control the price of commodities. Note how equities have recovered to their previous levels but gold, silver and oil all remain suppressed. They know that there is nothing that will quell the 'recovery' faster than high oil prices and nothing that would present a better alternative to equities, as an investment, than PM's. Especially in the current investment environment which they created.

Wed, 02/27/2013 - 17:39 | 3283313 max2205
max2205's picture

AAPL was filled with trader land mines.


Most scary was a full reversal in the long bond +.3%.... Ben could lose the long end if he keeps driving IWM higher

Wed, 02/27/2013 - 18:44 | 3283526 Just Ice
Just Ice's picture

but...a recovery of 144, basis June, I'll be long there

Wed, 02/27/2013 - 17:49 | 3283332 agent default
agent default's picture

Meanwhile the east is buying the physical metal at a discount.  And when the whole thing unravels Prez Husein and CNBC will blame China, Russia and Marvin the Martian as responsible for the results of the myopic policies of the Westrn Political/Banker cabal.

Wed, 02/27/2013 - 17:20 | 3283259 Lost Wages
Lost Wages's picture

Apparently no one thinks there will be a sequester.

Wed, 02/27/2013 - 17:22 | 3283268 insanelysane
insanelysane's picture

It's priced in.

Wed, 02/27/2013 - 17:29 | 3283282 mayhem_korner
mayhem_korner's picture



No one (read: Algos) thinks the sequester matters.  It does matter, but not in terms of near term market ramps or flash crashes.  The sequester holds the potential of awakening a number of sheep by putting them out of work for at least a little while.  And the most critical ratio to the whole Ponzi scheme is the number of awake as a percent of the total.

Wed, 02/27/2013 - 20:48 | 3283938 lotsoffun
lotsoffun's picture

there will be no sequester - and that should be another 300+ dow points easy.  it's all show and tell.

Wed, 02/27/2013 - 17:20 | 3283262 EclecticParrot
EclecticParrot's picture

Groupon's tanking after hours.  Could this bellwether impact tomorrow's trading? 

Wed, 02/27/2013 - 17:30 | 3283287 Mark123
Mark123's picture

It will only impact overnight....then a miracle turnaround will occur just before markets open.  Voila...bull market.

Wed, 02/27/2013 - 17:41 | 3283316 max2205
max2205's picture

Still has a incredable Mkt cap of $3, yes $3 Billion.....

Poof!.....more to come if aapl doesn't buy them

Wed, 02/27/2013 - 23:10 | 3284305 GMadScientist
GMadScientist's picture

Yes, I'd look into a 3x short on the whole lame-ass online ponzi sector.

Wed, 02/27/2013 - 17:22 | 3283266 Bastiat
Bastiat's picture

Message is clear: Fed can QE $1trillion a year and only the desired assets will inflate:  RE, Bonds, and Stocks.  Gold, the inflation canary, has been replaced with a freeze-dried replica.  It will be like this forever!  We are in complete control! 

Wed, 02/27/2013 - 17:43 | 3283318 agent default
agent default's picture

It works.  Until it doesn't... Then what?

Wed, 02/27/2013 - 17:45 | 3283319 Bastiat
Bastiat's picture

I think that question is what has the Bernank looking so drawn these days.

Wed, 02/27/2013 - 18:03 | 3283383 LooseLee
LooseLee's picture

Na. He is thinking of what the penalty of perjury might be later.

Wed, 02/27/2013 - 18:35 | 3283494 Bastiat
Bastiat's picture

An academic haunted by the increasingly insistent presence of real world consequences.

Wed, 02/27/2013 - 17:46 | 3283324 McMolotov
McMolotov's picture

Your post fittingly reminded me of this:

Wed, 02/27/2013 - 17:54 | 3283342 silver surfer
silver surfer's picture

And led me thinking of Heavy Voodoo by Lee Scratch Perry... one dollar come.. hallo .. ten dollar come.. international woodoo

Wed, 02/27/2013 - 18:30 | 3283478 Bastiat
Bastiat's picture

Wow! Thanks for that.  I noticed in the credits: Keith Richards, guitars.

Wed, 02/27/2013 - 18:32 | 3283483 Bastiat
Bastiat's picture

The comments under that on youtube are great: 

"My panic attacks started by watching this when I was a? very young boy in the late 60's. I still get goosebumps watching it now 40 years later!" 

Wed, 02/27/2013 - 17:22 | 3283267 natronic
natronic's picture

Stocks are up and PMs are down.  So one must conclude that everything is fine right?  WRONG!!!!!

Wed, 02/27/2013 - 17:23 | 3283270 Philippines
Philippines's picture

Something recently seems to be cooking, and it's not Italian food.

Wed, 02/27/2013 - 22:22 | 3284194 Law97
Law97's picture

It's called "The Books."

Wed, 02/27/2013 - 17:24 | 3283275 azengrcat
azengrcat's picture

Full Printard!

Wed, 02/27/2013 - 17:29 | 3283281 Mark123
Mark123's picture

Everything looks good when you borrow and spend money.  Well, everything except your long term prospects.


Take a look at a long term stock chart....say back to 1985.  Three massive bubbles:

1. Banking deregulation bubble (bursts early in 2000's)....massive growth in exotic financial instruments (con men gone wild)

2. Housing bubble (bursts in late 2000's)....massive growth in access to credit for people with poor credit

3. Money printing bubble (bursts in ????)....massive growth in government debts all over the world


Of course, when bubble #3 bursts perhaps we won't see the impact in the stock market....but its time is up.  Any moment now....I'm waiting!!!

Wed, 02/27/2013 - 17:32 | 3283290 mayhem_korner
mayhem_korner's picture



The stock market will know when the dollar/govt debt bubble bursts.  Panic selling across the board as the masses head for the exits.  And Gold will separate from GLD once and for all.

But it will take a little more patience.

Wed, 02/27/2013 - 17:36 | 3283302 20-20 Hindsight
20-20 Hindsight's picture

In theory, you're right, but we all know that this is not going to happen any time soon, because we remain stuck on fucking Groundhog Day.  

Wed, 02/27/2013 - 17:33 | 3283292 NEOSERF
NEOSERF's picture

Says something that on the first sequestration go around, there was almost exactly two weeks of angst...this time, not even 24 hours...nobody believes Congress will either do the right thing or even not do anything....perfect world as this legislative body has almost hit bottom in terms of irrelevance.  Whatever is passed is already a tree falling in the woods...

Wed, 02/27/2013 - 17:58 | 3283357 Oldwood
Oldwood's picture

Denial of reality cannot persist in a constant state. Like any addiction it must "progress". The dose must increase. When you get caught short you might have a moment of clarity, the thought that maybe you have gone terribly wrong in your path, but that passes pretty quickly. The only thought in the front of your mind is that you must have MOAR! The errors in your ways will be dealt with later, but the crisis must be The markets will go higher until they simply cannot. None of us know where or when that might be. It could be a weak heart or just stepping off the curb in front of a bus...or your pusher might get tired of your lame promises to pay tomorrow for a little nudge today, and just put a cap in your ass. There is no tomorrow because these assholes have made sure of it. So carry on. Stop bitching about reality because those that could do anything about it DON'T CARE. They are the pusher and when you are dead and gone there will be another one there just like you to take your place.

Wed, 02/27/2013 - 17:59 | 3283362 GrinandBearit
GrinandBearit's picture

Notice what's been happening for the last year or so...

1. TPTB create some fear event (ie. sequester, fiscal cliff, debt limit, Euro crisis or whatever). 

2. The HFT algos climb the wall of worry.  

3. The potential disaster is magically fixed/papered over and the market shoots up to new highs.

4. Rinse and repeat as necessary.

Wed, 02/27/2013 - 17:59 | 3283363 tahoebumsmith
tahoebumsmith's picture

EU phoria BITCHEZ. Just keep on smoking the crack pipe and playing lets pretend with yourselves. The more they play the worst it gets. This shitstorm is beyond most people's comprehension. OBTW I would highly recommend any Johnny come latelys to start stacking while the opportunity still presents itself, especially after the cephalopod's call yesterday of 1450. With that said you know it's only going one way...yup


Wed, 02/27/2013 - 18:00 | 3283369 jtmo3
jtmo3's picture

Not forgotten, just ignored. It doesnt fit the buy anything anytime scheme.

traders must love this market knowing down is not an option!

Wed, 02/27/2013 - 18:06 | 3283395 Super Broccoli
Super Broccoli's picture

banks are the only ones left on the market so whenever they decide to prop the shit up ...


good thing is when the ponzi collapses they'll be the ones biting the dust !

Wed, 02/27/2013 - 18:19 | 3283441 jubber
jubber's picture

That Lee Scratch Perry song is brilliant thanks for posting

Wed, 02/27/2013 - 18:55 | 3283559 Bastiat
Bastiat's picture

Bernanke's new theme song - should be played whenever he appears in front of a camera.

Wed, 02/27/2013 - 18:27 | 3283467 TrustWho
TrustWho's picture

Look at a 2 day chart of S&P 500, 1 hour 45 minutes into Daddy Bernanke's presentation/discussion with the Senate, Daddy had demonstrated who was in charge at the Fed and my Daddy had their backs covered with his money printing computers.

I am so sorry Daddy, because you say you do not print, because you only exchange cash with banks who provide you with their high grade treasuries and mortgages. You lost me though when you say you may never sell this high grade paper back to the banks and remit all cash, except your meager expenses, to the USA treasury. Sure sounds like printing money to me, but who the hell cares, the stock market had a strong rally!

Wed, 02/27/2013 - 18:29 | 3283472 venturen
venturen's picture

Just note the FED print $85 Billion a month the Sequestration for the year is $83 Billion...where is the problem?

Wed, 02/27/2013 - 18:33 | 3283487 venturen
venturen's picture

Just think the FED will hand out $4 Billion tomorrow which wall street with leverage and rehypothicate into $80 Billion, Then they will do it against Thursday and Friday and Monday and Tuesday so on and so forth....S&P 10000 here we come!!!!

Wed, 02/27/2013 - 18:46 | 3283531 Oldwood
Oldwood's picture

I just like the pretty color pictures Tyler makes for us!

Wed, 02/27/2013 - 19:12 | 3283636 disabledvet
disabledvet's picture

Italy might be "forgotten" (I don't believe that for one second) but the Law of Comparative Advantage is not. While I do agree volume still is light there is can be no doubt which capital markets are deepest and richest. How else to explain trillion dollar deficits "with nary a sweat"?

Wed, 02/27/2013 - 19:34 | 3283714 Haager
Haager's picture

Looking at Europe's stocks over the last few weeks - or days, lately - I wonder what the bad-news event tomorrow or friday will be to hammer stocks back down again... DAX ranges between 7500-7800, AEX range +7/-9 and so on...
And yes, Berlusconi is quite an ugly black swan...

Thu, 02/28/2013 - 03:04 | 3284836 Haager
Haager's picture

Initial could be a combined Walmart/Groupon downfall today with addition of sector going down.

Wed, 02/27/2013 - 19:36 | 3283720 ekm
ekm's picture

You guys should know somethig about Dow or S&P:


Something that does not change, is no longer a reference.

Wed, 02/27/2013 - 19:51 | 3283777 Edward Fiatski
Edward Fiatski's picture

If these two two charts don't you tell the story of "Fuck-me-in-the-ass-The-Top-is-in", then nothing else will. The second one for a 7 year timeframe is even scarier.

Wed, 02/27/2013 - 20:03 | 3283811 khakuda
khakuda's picture


Massive equity bubble Part II now that the bond bubble is in place?  Massive real estate bubble Part II?  Oil price surge killing the economy?

The monetary madness has already gone on too long, but what will stop it?

Thu, 02/28/2013 - 00:21 | 3284539 Yperkeimenos
Yperkeimenos's picture

It ends in Wars and Dictatorships.Expect lots of them over the coming years.

Wed, 02/27/2013 - 23:11 | 3284306 GMadScientist
GMadScientist's picture

Das ist eine sqveeze!!!!

Wed, 02/27/2013 - 23:39 | 3284410 dunce
dunce's picture

I can not actually get out of the market because most of my life savings are in a self directed IRA in stocks and you can not really own PM in an IRA, but i am trying to sell off some winners and losers in my taxable account to net close to zero for tax purposes. i only recently started accumulating silver and am looking into gold. Better late than never.

Thu, 02/28/2013 - 00:10 | 3284506 Awakened Sheeple
Awakened Sheeple's picture

S&P trendline failed to confirm, dollar held support at the 200 dma, vix held up at the 50dma... Might be a good short if you have the nuts.

Junk away.

Thu, 02/28/2013 - 05:12 | 3284958 polo007
polo007's picture

The Bernanke Reflation

Naturally, the Fed and its most vocal constituencies -- Wall Street and politicians -- see nothing much to worry about. Wall Street sees a reflation as a way to ease its credit problems, as price increases ease debt burdens and perhaps reflate housing values. Congress and the White House see a way to perhaps avoid a near-term recession, which might get them past the election.

As for the Fed, its Governors are dusting off their favorite intellectual justifications. We are told that inflation isn't as bad as it seems because "core inflation" -- which excludes food and energy prices -- isn't rising as fast as the consumer price index. However, food and energy are what most Americans are having to spend ever more of their paycheck to buy. Thus the Bernanke reflation is in part self-refuting even as a short-term recession antidote, because it robs consumers of some of their discretionary income just when the economy needs it.

Meanwhile, even the Phillips Curve is making a comeback. That's the notion -- popular before it was discredited in the 1970s -- that there is a trade-off between inflation and economic growth. In its new version, argued by Fed Governor Frederic Mishkin, the Phillips Curve doesn't exist in the long term but does in the short term. Thus the Fed can afford to open the monetary flood gates now because the slower economy could lead to lower prices later this year. Then when the economy recovers, the Fed can afford to tighten money again.

This is a beguiling intellectual construct, but it puts a great deal of weight on Fed Governors to know when to tighten again. They were supposed to do something similar in 2003-2005, but they were terribly wrong. Then as now they were also dismissing such forward-looking price signals as gold and oil and instead focusing on such misleading indicators as "core inflation" and the money supply. Mr. Mishkin may be seen as a monetary wizard at the Fed, but to investors around the world he is beginning to look more like a high-class inflationist.

The people who aren't being fooled by all this are the American people. They don't pay their bills with "core" dollar bills, and they know those dollars buy less with each passing month. This explains their rising economic anxiety -- and anger -- better than trade or job losses do, especially since the job market has remained relatively healthy. Inflation is the great thief of the middle class, as even Americans who don't recall the 1970s are learning. With its all-in reflation bet, the Bernanke Fed is gambling with their money.

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