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European "Bad Is Good" Stock Exuberance Continues But Bonds Reverse Gains
Another day, another set of horrible European data that merely stokes the idiocy of bad is good front-running of an ECB rate cut next week. We remain somewhat skeptical that a rate-cut will actually do anything here for this 'fragmented' continent when simple old 'free-money' is not fixing anything. But anyway... European stocks surged ahead again - even after yesterday's best day in 9 months. The difference today... European sovereign bonds deteriorated quite notably with Italian spreads wider by 10bps (despite its equity market's strength reasoned on the possibility of a new PM). Spain and Italy are up 6% and 5% respectively this week, and their bond spreads -32bps and 21bps respectively. We are sure this will end well. No pressure, Mr. Draghi...
European bonds not buying it today... but stocks are so no worries...
Charts:Bloomberg
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TYLERS:
a little OT but i was hoping you guys could look into the HFT/ALGO trading in the usd/yen. During the flash crash it moved roughly 50 pips. it must have taken a phenominal amount of cash to move a currency like that. this seems a little unprecedented considering algos were typically in the equities markets. this will have dire consequences in my opinion.
keep up the good work and fighting the good fight
If "Bad is Good" then the future promises to be fu$%ing Great...
Are you kidding?
HFT is everywhere, scalping down to the pip.
no it isnt everywhere considering the euro/XXX pairs did not move during the flash crash... only jpy/XXX pairs
something just isnt right
It did move, but was sold on every fraction of a pip during the whole of 4 minutes.
The move was caused by a trough of cold air that moved over the economy for 1.30234 seconds.
It's all weather related. No need for financial analysis, just weather reports.
Weather.com reporting in this week's forecast, that APPL will continue to fall due to an early frost.
I wish KWN would shut up already. Eric is becoming worse than MSM. There's fewer and fewer places you can go and try to get some real news and not predatory propaganda.
WTF are you talking about?
Can't read?
Speaking of which the yahoos are howling:
http://finance.yahoo.com/blogs/daily-ticker/economic-argument-over-paul-krugman-won-150247189.html;_ylt=Ajet1Mm7M3mGrudaT4TmcGCiuYdG;_ylu=X3oDMTN1dW5sdnRyBG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnAzFjZmQ3NjI2LTQ0YTktM2QwMy1iYzZlLTRjNGI2YzczNjA4NgRwb3MDMQRzZWMDbWVnYXRyb24EdmVyAzY4ZWM0MDQyLWFjZjMtMTFlMi05ZDdmLTk0OTQyZWViMjhhOQ--;_ylg=X3oDMTFkcW51ZGliBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3BtaA--;_ylv=3?vp=1
They are saying Krugman has won the argumnt! What a load of BS!
I can't wait to see the 1/2 have life of Draghis' next save the euro at all costs ' parlour show'...
Let's see... German car sales down double digits, 87 year old president in Italy with no mandate, China in a slowdown which is the main EU export market, PMI in Europe in the toilet, and unemployment still increasing in Greece, Spain, Portugal, France, Belgium, and Italy.
BULLISH!!!!
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Thanks!
Must...Front Run....Rate Cut.....fix-all.....fer sure....buy moar stawks....
Do you guys not get it? Money in bank = BAD. Must move to something. If you look at the Wiemer hyperinflation stocks = GOOD. Ya even if the companies current state = BAD.
So BAD + BAD = GOOD.
What's wrong with you people? Didn't anyone ever tell you trading on economists advice is the quickest way to loose money?
I am very surprised that after two years, some are still amazed at this.
The central banks have ACCEPTED that they believe pushing stock prices up will reduce unemployment through wealth effects (Do not junk me immediately, I don't agree with this) I posted this a few weeks ago, but I will post it once again here:
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I listened to a presentation by someone from Bank of England a few weeks ago, claiming that employment and stock markets are correlated and if the central banks push up the stock market enough, they will create enough wealth effects to reduce unemployment. He said he is trying to convice the MPC that this is the route Bank of England should take. Here is the paper:
http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=9153
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So this is the new normal: They will push up the stock markets as bad economic data come. The rules of the game have changed. Simple as that.
It is not exuberance. It is inflation. We are seeing a rise in the nominal price of stocks, that is all, IMO. With more money printing hitting the streets everyday, we should expect stocks to rise, and rise a lot....until we end up pushing wheel-barrows full of fiat.