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Overnight Summary, In Which We Read That The German ZEW Miss Is Blamed On "Winter Weather"

Tyler Durden's picture





 

It is one thing for the market to no longer pay attention to economic fundamentals or newsflow (with the exception of newsflow generated by fake tweets of course), but when the mainstream media turns full retard and comes up with headlines such as this: "German Ifo Confidence Declines After Winter Chilled Recovery" to spin the key overnight event, the German IFO Business climate (which dropped from 106.2 to 104.4, missing expectations of 106.2 of course) one just has to laugh. In the artcile we read that "German business confidence fell for a second month in April after winter weather hindered the recovery in Europe’s largest economy... “We still expect there to have been a good rebound in the first quarter, although there is a big question mark about the weather,” said Anatoli Annenkov, senior economist at Societe Generale SA in London." We wonder how long Bloomberg looked for some junior idiot who agreed to be memorialized for posterity with the preceding moronic soundbite because this really is beyond ridiculous (and no, it's not snow in the winter that is causing yet another "swoon" in indicators like the IFO, the ZEW and all other metrics as we patiently explained yesterday so even a 5 year old caveman financial reported would get it).

And if that wasn't reason enough to breakdown in riotous laughter, one look at the reaction in the EUR, which tumbled 40 pips on the news, only to soar 100 immediately thereafter as the BIS came to the rescue and started lifting every offer to give the impression that all is well, and in the process push the USDJPY and the eMini stock future with it, should be enough.

There were no other major economic news (that could be blamed on the weather), and the next key reporting milestone is the US durables report. Just what idiotic reason will the miss here be blamed on by the MSM we wonder.

In the European fixed income space, the onslaught of Japanese cash continues, with Spanish 5 Year yields sliding under 3% on the back of even more calls for ECB rate cuts, while at the same time Germany auctioned 30 Year bonds at a record low yield of 2.16%. The scramble for yield has never been more acute.

Finally, moments ago we learned that Italy's brand new (and we use the term loosely), second term president, 87 year old Napolitano will name PD depity Enrico Letta as PM of Italy. How Berlusconi will feel supporting an opponent when the latest polls have his coalition far in first place, remains to be seen. For now the market doesn't care and only hope there is no more snow in the winter which apparently explains all that is wrong with the world.

For everything else, there's CentralBankCard.

Some more insights from SocGen:

The pace of decline in peripheral bond yields and the resulting narrowing in spreads over bunds is taking on frightening proportions, and for a change, does not strictly appear to be only sponsored out of Japan (waiting on monthly balance of payments data to confirm that is the case). On a day when the global economy flashed new signs of slowing demand, yesterday's performance across asset classes was very impressive to say the least (iTraxx tighter by nearly 4pts, Eurostoxx +2.5%). The bullish price action has not been reflected in the currency markets (with the exception of the besieged Swiss franc), with the SEK in particular taking a serious knock. With peripheral yields crumbling, gone are the safe haven attractions of AAA currencies like the SEK (or the franc).

But are the moves for real? Harking back to miserable macro fundamentals, it won't be a 2-year extension for Spain to meet its deficit limit that will bring back growth imminently, or a contraction in German GDP that will bring back inflation in Switzerland. Either there is a big reallocation trade going on in Japan (EUR/JPY upside potential) or markets are pinning their hopes on central banks like the ECB (the SNB) to deliver something extra in terms of stimulus (currency intervention). But as our economists point out, this is not seen resolving the underlying issues of credit demand and supply which have dogged the eurozone's recovery. The German IFO survey this morning could be a timely reminder that while there is positive contagion in bonds, the negative ripple effect from southern to northern Europe has not stopped spreading. With the above in mind, predicting the next 1.5% move in EUR/USD is incredibly difficult.

The full recap from DB's Jim Reid:

It was one of those ‘bad news is good news’ days for markets. The disappointing German (and Chinese) PMIs were quickly looked through by investors as expectations of ECB easing rose on the back of softer data. A broad based rally in markets carried the CAC, DAX, IBEX and FTSEMIB +3.58%, +2.41%, +3.26% and +2.93% higher on the day, respectively. Italian and Spanish 10-year bond yields fell by 11bp and 21bp to close at 3.94% and 4.28%, respectively – which also brings them to their lowest levels since November 2010. European credit spreads echoed the move elsewhere although they were a relative underperformer to equities with Crossover only13bp tighter on the day. It was a showdown between fundamentals and hopes of (more) central bank liquidity with latter seemingly gaining an upper hand yesterday.

The European session cleared the way for a positive start in the US which lasted throughout the day, only to be briefly interrupted by a fake Associated Press tweet that two explosions had hit the White House. AP later clarified that its twitter account has been hacked and the tweet was bogus. Nonetheless it caused a short-lived panic which saw the S&P 500 plunge 1% in the afternoon before recovering in the next few minutes to eventually close 1% higher on the day. US sentiment was supported by the better-than-expected new home sales print (1.5% vs 1.1% expected) even though the Markit US PMI Preliminary (52.0 vs 53.9 expected) and Richmond Fed survey (-6 vs +2 expected) for April were both below market estimates. It was also a mixed day for earnings as strong EPS beats was again met by disappointing top line performances. Of the 36 companies that reported yesterday, 26 of those topped EPS consensus but only 10 of those came ahead of sales estimates.

Apple’s quarterly earnings report was the main story after the closing bell. The company delivered better-than-expected earnings and revenue but sales outlook was light. Capital management was a key focus with Apple more than doubling its capital return program from $45bn to $100bn by 2015. For us credit people, it was interesting to see Apple announce plans to put some debt on its balance sheet for the first time since 2003. Apple received its debut credit rating of AA+ (S&P) and Aa1 (Moody’s) yesterday so maybe credit investors are not too far away from taking a bite at Apple after all! Apple stocks closed -0.54% lower in extended hours trading to close at $403.95/share.

Turning to the Asian session, equities are mostly stronger following the positive US lead overnight. The Nikkei (+1.6%) is leading the way again while the Hang Seng and KOSPI are also +1.3% and +0.9% higher as we type. WTI is up +0.3% at $89.5/bbl while Gold is up +0.7% at $1423/oz. Asian iTraxx is about 1bp tighter and the new issue pipeline remains very robust. Australia’s sovereign CDS is 1bp tighter despite S&P’s warning that the country’s AAA credit rating will come under pressure if the government does not show commitment to eliminate the budget deficit. The Shanghai Composite (+0.68%) is up for the first time this week after a 2.6% decline yesterday.

Staying in the region, the WSJ reported China sent eight maritime-patrol ships to the waters surrounding the Senkaku/Diaoyu islands. China said it was responding to the "illegal entry" of boats piloted by Japanese activists into its waters. The Chinese fleet was the largest sent to the area since the island dispute flared up in September last year. Senior government officials from each side demanded that the other withdraw ships from its territorial waters around the islands. This renewed tension came a day after visits to the Tokyo war shrine by top aides of PM Abe which reportedly had set off angry protests from Seoul and Beijing.

Back to Europe, Italy’s President Napolitano is set to announce his choice of PM to form a new government today. Reuters reported that the new coalition government could take office in a matter of days and would be backed primarily by the rivals on the centre-left and centre-right. These are the same parties that had refused to reach a deal since national elections in late February. Former PM Amato is said to be a leading candidate to receive the pole position although the mayor of Florence, Matteo Renzi and centre-left deputy leader Enrico Letta have also emerged as possible candidates. Berlusconi's PDL, the centre-left PD and the centrist Civic Choice movement have all said they would cooperate with whoever Napolitano chooses.

So while we keep a close eye on Italian politics today, ECB’s lending survey and Germany’s IFO survey are also key releases in Europe. As we go to print, Credit Suisse just reported better-than-expected earnings headline. In the US, durable goods orders will be the notable print. We also have a busy day of company earnings with more than 40 S&P 500 firms expected to report.

 


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Wed, 04/24/2013 - 07:03 | Link to Comment Harlequin001
Harlequin001's picture

Seems reasonable...

I mean no one's fucking around with the gold markets, and the economy is not manipulated, interest rates are fair, Europe's fixed, there is no inflation, the banks are all sound again and now everybody can get out of their doors again they will all now head down to the nearest shop and buy an iPad or something.

I mean, I believe him, it's not like it snows in winter every year is it...

I mean, who could possibly have foreseen that?

Wed, 04/24/2013 - 07:03 | Link to Comment Sheeple Shepard
Sheeple Shepard's picture

And dont forget the F.E.D is going to "wind-down" "asset" purchases soon.........thats a good sign of recovery.

 

"Australia's central bank is planning to invest around 5% of its foreign currency reserves in Chinese government bonds, its deputy governor has said."

 

http://www.bbc.co.uk/news/business-22276222

Wed, 04/24/2013 - 07:24 | Link to Comment StychoKiller
StychoKiller's picture

HOW did we ever muddle through all these traumatic seasons before The Bernank® and QE-infinity?

Wed, 04/24/2013 - 13:28 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

The 4 top enemies of economic growth are

 

  1. Winter
  2. Spring
  3. Summer
  4. Autumn

We need QE all year long!

Wed, 04/24/2013 - 06:49 | Link to Comment Haus-Targaryen
Haus-Targaryen's picture

It was really chilly --- for a long time this year.  

 

Nothing to see in Europe.  All is well.  

Wed, 04/24/2013 - 07:20 | Link to Comment Urban Redneck
Urban Redneck's picture

I was shoveling SNOW a three days ago 

But three days before that it was SUNNY and in the upper 70s (for those stuck in Farenheight 451 land) 

Just like TODAY

It's called WEATHER

And I can see it in Germany from my house

 

Wed, 04/24/2013 - 07:23 | Link to Comment Haus-Targaryen
Haus-Targaryen's picture

Like Sarah Palin can see Russia from hers ... ? 

Wed, 04/24/2013 - 07:28 | Link to Comment Ghordius
Ghordius's picture

I presume he means the hot German chick sunbathing naked on her lawn ;-)

Wed, 04/24/2013 - 09:51 | Link to Comment Urban Redneck
Urban Redneck's picture

We're just poor communalists (as opposed to collectivists) here and can't afford lawns or lawnmowers,however those sunbathers on the communal football pitch can be even more distracting than ZH when working from home on a beautiful day...

Wed, 04/24/2013 - 06:51 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Damn global winter weather.

 

We need a tax credit scam to solve this problem.

Wed, 04/24/2013 - 06:50 | Link to Comment fonzannoon
fonzannoon's picture

Earnings actually look pretty good this am.

Wed, 04/24/2013 - 06:53 | Link to Comment mac768
mac768's picture

The retards are in full control of the asylum

Wed, 04/24/2013 - 06:57 | Link to Comment NoDebt
NoDebt's picture

It's close enough to May.  I guess it's time to sell and go away for a while.  So long and thanks for all the fish.

Wed, 04/24/2013 - 06:57 | Link to Comment ziggy59
ziggy59's picture

Its a global event! MSM BS keeps raining down on all!

Wed, 04/24/2013 - 06:59 | Link to Comment aleph0
aleph0's picture

 

 

ROTFLMAO .. Winter weather !?!?!

... we had a warm winter this year .

And BTW ... "a little" snow is usual in winter ...  is it not !?

Wed, 04/24/2013 - 06:59 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Just another winter weather denier.

 

Oh sure....call us crazy you conspiracy freak!

Wed, 04/24/2013 - 07:26 | Link to Comment StychoKiller
StychoKiller's picture

Sure, everyone has a plan (until a snowball hits 'em in the face!)

Wed, 04/24/2013 - 07:33 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Did you get a background check for that snowball?

Wed, 04/24/2013 - 07:35 | Link to Comment Sheeple Shepard
Sheeple Shepard's picture

No, as long as its not a high capacity snowball pile.

Wed, 04/24/2013 - 07:59 | Link to Comment NoDebt
NoDebt's picture

I just pulled out my handy-dandy 1974-vintage globe for the kids to play with (possibly learn something, but likely not).  I started with my finger on Germany (West Germany, of course!) and followed that parallel around to the west.  I hit Canada.  Hmmmmm.  That can't be right.  I thought Germany was on the same lattitude as South Carolina.  I guess they weren't as good at making globes back then as they are today.  No way it would be cold in Canada during the winter.

 

Wed, 04/24/2013 - 07:02 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

"Back in the day winter used to be warm. This year it was cold, which caught us by surprise"

Wed, 04/24/2013 - 07:11 | Link to Comment Sudden Debt
Sudden Debt's picture

yeah... to cold for the flying pigs to come out and in normal years, flying pigs is a big moral booster for the Germans.

So... with no flying pigs, they didn't feel like working hard or spending anything.

Economics 101...

Wed, 04/24/2013 - 07:45 | Link to Comment Esso
Esso's picture

Apparently all the Skittle-shitting unicorns have died of exposure, and who's ever heard of a snowbow? Unicorns need their rainbows, dammit!

Obviously, we need some strict, new weather control laws. There is no place for Winter in The New Normal.

Wed, 04/24/2013 - 07:06 | Link to Comment Sudden Debt
Sudden Debt's picture

WELL, THERE'S A BIGGER PROBLEM WITH THE EUROPEAN WEATHER RIGHT NOW!!

 

I checked my water basin I had installed last year and noticed that the water levels are really low. So... I first thought I had a leak and freaked out about it because it kind of costed me a nice penny to build.

No leak after filling it up to check for a leak. Than I checked the pluvio meter (which I should have done first because filling the basin up with tap water set me down 400 euro....) and I noticed that in the last few months, there was hardly any rain!

The water tables are VERY VERY VERY LOW RIGHT NOW!! AND IT'S NOT EVEN SUMMER!

So if we have a hot summer, agriculture will be a bitch and as industry in the Rhein region in Germany uses up a lot of water, even the industry will feel it.

 

Wed, 04/24/2013 - 07:09 | Link to Comment Headbanger
Headbanger's picture

Better stock up on lots of beer before the brerweries jack up their prices!

Wed, 04/24/2013 - 07:17 | Link to Comment Sudden Debt
Sudden Debt's picture

I'm having a debat about this with my wife but she doesn't believe it's a good investment because the stock in the basement keeps vaporising...

Wed, 04/24/2013 - 07:27 | Link to Comment Headbanger
Headbanger's picture

Due to excessive evaporation from the dry conditions no doubt.

Wed, 04/24/2013 - 07:29 | Link to Comment Sudden Debt
Sudden Debt's picture

that or we have a Irish leprechauns infestation in the basement who drink the beer behind my back...

 

Wed, 04/24/2013 - 07:21 | Link to Comment Edward Fiatski
Edward Fiatski's picture

It's baking-hot here in the Med. :)

Lemons, olives, oranges & bananas everywhere! Say, can they be used as a substitute for the German potato?

Wed, 04/24/2013 - 07:29 | Link to Comment Headbanger
Headbanger's picture

Banana vodka?  Or would that be a liquor? 

Wed, 04/24/2013 - 07:35 | Link to Comment Sudden Debt
Sudden Debt's picture

we need a EU summit to figure that one out...

Wed, 04/24/2013 - 07:54 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

That banana vodka is no longer belonging to you.

Wed, 04/24/2013 - 08:13 | Link to Comment negative rates
negative rates's picture

Yea, Mr. Brandy pretty much took over that croud.

Wed, 04/24/2013 - 08:08 | Link to Comment Edward Fiatski
Edward Fiatski's picture

No doubt the summit itself is to be located in the French Riviera, in order for the delegates to sample & review the actual proposal in a most relaxing environment, and to savour in the flavours of olives, limes & wet young pussy.

Wed, 04/24/2013 - 07:06 | Link to Comment Headbanger
Headbanger's picture

A cold winter in Germany of all places!!??  Really??

What a surprise, huh!

Wed, 04/24/2013 - 07:05 | Link to Comment valley chick
valley chick's picture

We wonder how long Bloomberg looked for some junior idiot who agreed to be memorialized for posterity with the preceding moronic soundbite because this really is beyond ridiculous (and no, it's not snow in the winter that is causing yet another "swoon" in indicators like the IFO, the ZEW and all other metrics as we patiently explained yesterday so even a 5 year old caveman financial reported would get it).

<----------even a valley chick gets it. :)

Wed, 04/24/2013 - 07:06 | Link to Comment Racer
Racer's picture

Never ever blame the real reasons of course, always something else's fault. Weather is a particularly reliable source as it is invariably either too hot or too cold or too wet or too dry!

Wed, 04/24/2013 - 07:16 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Could always just try crying.

 

It's not very eloquent.....but I am talking last ditch here. Might work long enough for a clean getaway.

Wed, 04/24/2013 - 07:24 | Link to Comment Sudden Debt
Sudden Debt's picture

she used to say it's to hot... to cold...

than I also started complaining that she was to dry...  or so wet...

that used to be a big discussion in the bedroom a few years back...

than I convinced her to take valium so she could sleep better and since that point on, all discussion about this before sex just stopped.

1 pill... wait 5 minutes... and the maneuvers can start.

Wed, 04/24/2013 - 07:30 | Link to Comment StychoKiller
StychoKiller's picture

Valium is no longer manufactured in the USA (sigh)

Wed, 04/24/2013 - 07:08 | Link to Comment Ghordius
Ghordius's picture

"How Berlusconi will feel supporting an opponent when the latest polls have his coalition far in first place, remains to be seen" - well, it depends on the program, doesn't it? and of course how key committes and ministry will be partitioned

Wed, 04/24/2013 - 07:12 | Link to Comment firstdivision
firstdivision's picture

If you cannot dazzle them with brilliance, baffle them with bullshit.  At least they'll have a good laugh at your expense.

Wed, 04/24/2013 - 07:15 | Link to Comment Edward Fiatski
Edward Fiatski's picture

Ze Blitzkrieg was also blamed on the cold weather in Russia.

Wed, 04/24/2013 - 07:23 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

We'll have to check with the judges to see if we can give you that one.

Wed, 04/24/2013 - 08:14 | Link to Comment negative rates
negative rates's picture

We's is gonna have to judge the judge now, aint we?

Wed, 04/24/2013 - 08:28 | Link to Comment bnbdnb
bnbdnb's picture

Zwat iz zis vinter you speak ov?

Wed, 04/24/2013 - 08:33 | Link to Comment Bearwagon
Bearwagon's picture

Straight from the german hip, kids: All Quiet on the Western Front!

Wed, 04/24/2013 - 11:09 | Link to Comment Sandmann
Sandmann's picture

That is one weird blog.......wonder what loon is behind it ?

Wed, 04/24/2013 - 12:41 | Link to Comment tmorris
tmorris's picture

If you think this winter was cold, wait until next year when the Russians cut back the flow of natural gas to Europe!!  Every action has an unequal and direct reaction where the Russians are concerned!  Think Cyprus!!!!!!!!!!!!

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