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For Bonds, It's A Lehman Repeat

Tyler Durden's picture




 

There is plenty of discussion of outflows but we though the following chart was perhaps the most insightful at why this drop is different from the last few year's BTFD corrections. As we noted here, corporate bond managers have desperately avoided selling down their cash holdings (since they know dealer liquidity cannot support broad-based selling and its an over-crowded trade) and bid for hedges in CDS markets. But it seems, given the utter collapse in the advance-decline lines for high-yield and investment-grade bonds that the liquidations have begun. While the selling in high-yield bonds is on par with the Lehman liquidationlevels, it is the collapse in investment grade bond demand that is dramatic (and worse than Lehman). It's not like we couldn't see it coming at some point (here) and as we warned here, What Happens Next? Simply put, stocks cannot rally in a world of surging debt finance costs.

Corporate Bond Advance-Decliners lines are as liquidation-based bad as during Lehman (worse in fact for IG)...

 

Do Not Panic!! This is orderly...

The current decline in the high yield market, now at 30 trading days, has been the fastest since the end of the 2008 recession, with yields widening 159 bp. Only the July - October 2011 market decline had a greater ultimate magnitude than the current period.

 

As we noted here:

Remember - and it's important - there is no rotation that drives high-yield credit spreads wider without punishing equities. They are liabilities on the same capital structure and rise and fall in a highly correlated (well non-linear co-dependence) manner as the underlying business risk rises and falls. Do not, repeat do not, see high yield credit weakness as a sign of rotation to stocks - if the credit cycle has turned then stocks are set to fall. And bear in mind that while HY yields are at all-time lows, spreads are not and in fact being short stocks relative to credit makes more sense if you are you are a bear on the credit cycle here. The only problem being that the epic flows that sustained a credit market at non-economic levels for so long will exit in a hurry.

Charts: Bloomberg

 

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Tue, 06/25/2013 - 16:45 | 3692340 THX 1178
Tue, 06/25/2013 - 16:49 | 3692353 Groundhog Day
Groundhog Day's picture

"Get in there and SELL SELL SELL"

"Beaks where they hell is Beaks"

Tue, 06/25/2013 - 16:53 | 3692357 camaro68ss
camaro68ss's picture

bond sells turn me on.

Tue, 06/25/2013 - 16:56 | 3692366 g'kar
g'kar's picture

Bring on 5% CD rates!

Tue, 06/25/2013 - 16:59 | 3692373 fonzannoon
fonzannoon's picture

Good luck. The only chance banks have is to keep paying the peons zip and banking the spreads.

Tue, 06/25/2013 - 17:11 | 3692395 cougar_w
cougar_w's picture

So which one is easier for them to bail-in: CDs or savings? Whichever one it is, gets the better rate ... just before the sky catches fire.

Tue, 06/25/2013 - 17:14 | 3692405 zaphod
zaphod's picture

Don't worry folk, the FED can just drop short-term rates 500 basis points and start to print a bunch a money like it did in 2008. Then everything will be fine. It has worked every other time for the past 100 years.

The fact that short-term rates are already near zero and benny is printing massive amount every month already, is nothing to pay attention to.

Tue, 06/25/2013 - 17:22 | 3692430 icanhasbailout
icanhasbailout's picture

ZH: "stocks cannot rally in a world of surging debt finance costs"

Kevin Henry: #ChallengeAccepted!

Tue, 06/25/2013 - 18:13 | 3692580 derek_vineyard
derek_vineyard's picture

this economy is plenty robust it will welcome a hike in rates and return to normalcy.  ben's been holding the stock market back...watch the uopside when long rates hit 6%

Tue, 06/25/2013 - 18:57 | 3692706 Jake88
Jake88's picture

good one

Tue, 06/25/2013 - 20:30 | 3692909 francis_sawyer
francis_sawyer's picture

"The only chance banks have is to keep paying the peons zip and banking the spreads..."

~~~

Takes 'homeschooling' to learn how to do that...

Tue, 06/25/2013 - 21:16 | 3693011 TwoShortPlanks
TwoShortPlanks's picture

A 30 year Bond Boom, ending it's cycle in the biggest Bond Bubble in history, in a collapsing global economy, with all the printing that's happened, won't end in an implosion, it will end the same way a Star goes Supernova.

It will die like a Giant Star.

Tue, 06/25/2013 - 22:32 | 3693236 tip e. canoe
tip e. canoe's picture

here's the visual

http://www.youtube.com/watch?v=qm9_gpGF3Xw

on a long enough timeline, the White Dwarf outlasts all.

Tue, 06/25/2013 - 23:37 | 3693487 EscapingProgress
EscapingProgress's picture

I just opened up a credit card account with a $500 limit. Don't worry, the credit markets are saved!

Wed, 06/26/2013 - 01:25 | 3693700 derek_vineyard
derek_vineyard's picture

global bonds markets are twice the size of global equity markets...so the the 10% haircut to bonds can be offset by a 20% rise in equites to keep the wealth effect intact.    the effects of a vibrant, robust economy should not be underestimated!

Wed, 06/26/2013 - 01:35 | 3693707 derek_vineyard
derek_vineyard's picture

actually.....making only those contributions to ira's that go into the 1% coupon US debt salvation fund be tax deductible, eliminating cap gains on stock dividends and gains, raising tax rates on those living off of stock options will be a step into leveling the playing field.   all this policy promoting investing in equities has become way overdone and if the FED can ever be backed-off; the private citizen will be required to contribute.  Living a more frugal lifestyle, lessening materialism are other factors in the SOLUTION to this economic farce.  kinda like war bonds........if we buckle down and tackle the problem together....we have a chance.  but, i fear, it will take the crisis to get the soft, spoiled people of this country into the survival mode necessary to make these changes.  

anyone that will not comply with this plan will be deported to whatever country will take them.

Wed, 06/26/2013 - 08:51 | 3694216 tarsubil
tarsubil's picture

I was told at 4.82 the Federal Reserve Note is over. That sounds good to me.

Tue, 06/25/2013 - 18:37 | 3692651 More_sellers_th...
More_sellers_than_buyers's picture

These poeple spew these old adages like there is a market.  Laughable.  The Fed can do anything it wants. It has.  We don't know what they buy.  Besides, who is going to sell the market? No one owns stocks anymore and all the funds do is buy. Ask Fidelity what they do to a stock fund manager that sells stocks.

Tue, 06/25/2013 - 17:59 | 3692531 Panafrican Funk...
Panafrican Funktron Robot's picture

http://seekingalpha.com/article/1521072-s-p-500-stock-dividend-yields-vs-10-year-treasury

Pretty good article showing the collapse of the stock div arb.  Dividend stocks are going to get fucking pummeled.  

http://www.fool.com/investing/dividends-income/2013/06/25/will-dividend-paying-stocks-fall-more-than-the-mar.aspx

Yes, there are occasionally people on the Fool that are not completely stupid.  

Tue, 06/25/2013 - 18:04 | 3692551 fonzannoon
fonzannoon's picture

Panafrican I sold out of some good ones about 15% ago. Some healthcare reits and some MLP's.

I am not buying back in yet. You are making me believe I am not buying back in ever.

Tue, 06/25/2013 - 19:55 | 3692835 gmrpeabody
gmrpeabody's picture

+1

Tue, 06/25/2013 - 20:25 | 3692900 nope-1004
nope-1004's picture

The big indicator prior to the 2008 market meltdown was the corporate bond market.  Appears to be happening again, but will this time be different?  Dunno.

 

Tue, 06/25/2013 - 16:58 | 3692371 FL_Conservative
FL_Conservative's picture

I prefer the Kevin Bacon clip from Animal House that I posted yesterday.  Ok....I'll post it again.

 

http://www.youtube.com/watch?v=zDAmPIq29ro

Tue, 06/25/2013 - 17:12 | 3692397 The Thunder Child
The Thunder Child's picture

I prefer the Frank Drebin one myself, kind of reminds me of CNBC

http://www.youtube.com/watch?v=rSjK2Oqrgic

Tue, 06/25/2013 - 17:03 | 3692383 cougar_w
cougar_w's picture

please do not worry

Tue, 06/25/2013 - 17:19 | 3692418 The Shootist
The Shootist's picture

10 yr. creepin' to 2.61 currently.
http://youtu.be/8OZhw-aQTP8

Tue, 06/25/2013 - 18:15 | 3692586 Manipuflation
Manipuflation's picture

Country?  Are you some kind of hillbilly redneck bond vigilante asshole who is not afraid to tell anyone, who needs to be told, to fuck off?  If so, I will buy you a beer at the local tavern, shoot a few games a pool, hustle some cash and start a knock-down drag-out bar fight and get the hell out of there before the cops show up.  It's tradition

Tue, 06/25/2013 - 18:38 | 3692654 Manipuflation
Manipuflation's picture

A very interesting most popular comment on this one.LOL

 

http://www.youtube.com/watch?v=BjaqrL7Kzj8

Tue, 06/25/2013 - 17:47 | 3692507 disabledvet
disabledvet's picture

and i hear that's how you like it.

Tue, 06/25/2013 - 17:59 | 3692530 Cacete de Ouro
Cacete de Ouro's picture

Strogo

Tue, 06/25/2013 - 17:35 | 3692441 SRSrocco
SRSrocco's picture

Looks like we got all sorts of BLACK SWANS flying around today.  Funny how MSM seems to keep rolling along with the BS & GARBAGE as the whole system continues to disintegrate.

However, even as the paper price of gold continues to decline due to market manipulation... it hasn't stopped investors from withdrawing gold from the COMEX.  Today we had another nice withdrawal... from two different bank vaults.  If this amount was taken out of JP MORGAN's customer inventory... it would have totally wiped them out.

GOLD CONTINUES TO BLEED FROM THE COMEX

 

http://srsroccoreport.com/gold-continues-to-bleed-from-comex/gold-continues-to-bleed-from-comex/

Tue, 06/25/2013 - 18:11 | 3692575 Al Huxley
Al Huxley's picture

GLD inventory down by 16 tons today.  That's odd, I don't see a big spike in GLD trading volume.  I wonder where that gold went, I wonder who took it out of the GLD inventory.  I wonder if the Comex obligations will now settle cleanly for June.  So many mysteries.  The one thing it makes me really glad about though, is that thanks to the sterling character of our bankers and politicians, at least we know the gold market's not manipulated.

Tue, 06/25/2013 - 18:27 | 3692628 AL_SWEARENGEN
AL_SWEARENGEN's picture

JPM's vaults are near empty if we are to believe their numbers.  If we see a sudden spike up in the cocksucker's tonnage, it will be crystal clear.  Tyler, we need an update on bullion bank's warehouse stocks.

Tue, 06/25/2013 - 19:00 | 3692722 ekm
ekm's picture

I do not believe for one single milisecond that data coming from JPM vaults is correct.

 

It's all propaganda

Tue, 06/25/2013 - 21:28 | 3693039 PiratePawpaw
PiratePawpaw's picture

Many didnt believe that Titanic could sink.....

But im pretty sure the bridge crew had seats on the lifeboats......

Wed, 06/26/2013 - 00:11 | 3693577 jerry_theking_lawler
jerry_theking_lawler's picture

isn't all of this action created so their will be margin calls? doesn't margin calls=gold selling? won't this bring more gold available to the GLD?

 

just curious how/why this is playing out like it is. this is the 'deflationary' event I have been looking for in actual phyz gold, but is this the bottom? more selling on the way? inquiring minds want to know.

Wed, 06/26/2013 - 00:30 | 3693627 lakecity55
lakecity55's picture

once again, Al gets to the bottom line.

"EB, get over to the vault and let me know if Anything goes in or out. Is that too difficult? Wu and the rest of the Celestials are gonna make a move."

Tue, 06/25/2013 - 18:39 | 3692658 Herd Redirectio...
Herd Redirection Committee's picture

You would think with all this selling of gold that has driven the price down, some of it would have ended up in NY vaults.  Huh.  Strange that.  Almost like the weak hands are already empty?

Wed, 06/26/2013 - 03:17 | 3693777 zhandax
zhandax's picture

It appears more parties have realized the need to secure the real phys.  Even the paper price should bottom by August, and I wouldn't be surprised to see difficulties securing real metal by then.

Tue, 06/25/2013 - 18:58 | 3692716 ekm
ekm's picture

Do not fall for public data.

Its all propaganda

Tue, 06/25/2013 - 21:02 | 3692960 Bindar Dundat
Bindar Dundat's picture

Sell

Buy

Do they want us to sell or buy?

Tue, 06/25/2013 - 19:17 | 3692762 GS-DickinDaMuppets
GS-DickinDaMuppets's picture

I have got to say "Manipulaation" or not, I am beginning to wonder about where the Bass (fish) Turds are going to stop the downward slaughter - WTF !!

GS-DickinDaMuppets - doing God's work !

Wed, 06/26/2013 - 00:25 | 3693618 lakecity55
lakecity55's picture

Xi: haha, Oblama, you think snowman give spy codes??? hahaha, he give us rocation of all gorld!

Tue, 06/25/2013 - 19:28 | 3692785 Go Tribe
Go Tribe's picture

Bring down the Fed!
Buy The Fucking Gold and Silver Dip

Tue, 06/25/2013 - 18:45 | 3692673 slimething
slimething's picture

ROFL.....good one.

Tue, 06/25/2013 - 17:03 | 3692380 max2205
max2205's picture

But but they don't have to MTM bonds anymore.....right?

Tue, 06/25/2013 - 17:19 | 3692417 buzzsaw99
buzzsaw99's picture

i think you mean mtf (mark to fed) because there is no market, there is only the bernank.

Tue, 06/25/2013 - 22:15 | 3693191 BlackChicken
BlackChicken's picture

I think you mean mark-to-unicorn.

Tue, 06/25/2013 - 19:56 | 3692838 Never One Roach
Never One Roach's picture

I'm scared. This will be worse then th elast collapse, I'm afraid since the drivative exposure and leverage seems to be much worse now...mainly because the financial industry feels 'invulnerable' again.

Tue, 06/25/2013 - 20:36 | 3692916 SAT 800
SAT 800's picture

I reccomend you panic".

Tue, 06/25/2013 - 16:46 | 3692343 buzzsaw99
buzzsaw99's picture

I blame bubbles bernanke.

Never go full retard.

Tue, 06/25/2013 - 20:29 | 3692906 gatorengineer
gatorengineer's picture

If you think this is full retard, you aint seen nothing yet......

Tue, 06/25/2013 - 22:18 | 3693203 BlackChicken
BlackChicken's picture

I don't blame Benny, or the non Federal, no reserve, not a bank.

I blame all of us for putting up with this insane bullshit for 100 years.

Tue, 06/25/2013 - 16:47 | 3692346 Dr. Engali
Dr. Engali's picture

Tis but a scratch.

Tue, 06/25/2013 - 17:04 | 3692385 cougar_w
cougar_w's picture

It's only a flesh wound!

Tue, 06/25/2013 - 17:23 | 3692427 Manipuflation
Manipuflation's picture

That's nothing:  I demand a SHRUBBERY.

Tue, 06/25/2013 - 17:44 | 3692500 Quisat_Sadarak
Quisat_Sadarak's picture

A nice one.... and not too expensive...

Tue, 06/25/2013 - 18:01 | 3692542 Manipuflation
Manipuflation's picture

Correct, we have to keep costs under control except that we will turn around and demand a SECOND shrubbery to make the PMI look better.

Tue, 06/25/2013 - 18:05 | 3692555 cougar_w
cougar_w's picture

Or they will cut down the strongest hedge fund still in the market using nothing but -- a herring!

 

Tue, 06/25/2013 - 19:28 | 3692786 Manipuflation
Manipuflation's picture

LOL cougar_w.  Keep up the great posts.  I always enjoy them.

Tue, 06/25/2013 - 19:43 | 3692809 Manipuflation
Manipuflation's picture

One more for this thread.  I have long thought that this 46 seconds summed it all up well before the 21st century began.  Still true today.

 

http://www.youtube.com/watch?v=-JPL-rEuc9o

Tue, 06/25/2013 - 22:44 | 3693292 tip e. canoe
tip e. canoe's picture

are you suggesting coconuts migrate?

Tue, 06/25/2013 - 16:47 | 3692347 transaccountin
transaccountin's picture

so bonds can crash and equities do not follow suit?

Tue, 06/25/2013 - 16:51 | 3692354 Croesus
Croesus's picture

Bullish for Stocks!!!! Buy MOAR!

Pay no attention to shiny things!

Tue, 06/25/2013 - 22:25 | 3693226 BlackChicken
BlackChicken's picture

Shiny things are dropping like a rock in after hours; must be one hell of a sell off.

Tue, 06/25/2013 - 23:13 | 3693413 Croesus
Croesus's picture

@ BlackChicken:

Yeah, it's probably the usual sale, where paper with no asset is the determinant of price.......

Oh well, discount stackin' for the buyers!

Tue, 06/25/2013 - 16:52 | 3692356 fonzannoon
fonzannoon's picture

I am looking for yields to drop a bit from here. If they do. I am getting rid of some stuff. I was hoping equities would be down more right now.

Wed, 06/26/2013 - 00:19 | 3693597 Non Passaran
Non Passaran's picture

Me too, but now I figure people "know" CBs will jump in if TSHTF - like the China CB did and will do it again - so they're not even bothering to participate in this correction.
I don't know... In terms of no-brainers I can only think of one idea and that is to buy PMs when I get my next paycheck.

Tue, 06/25/2013 - 17:14 | 3692403 buzzsaw99
buzzsaw99's picture

It usually takes awhile for the short bus riders (equities) to notice that the bridge is washed out.

Tue, 06/25/2013 - 20:31 | 3692911 gatorengineer
gatorengineer's picture

people keep forgeting we still have Zirp and monetizing at a trillion a year...  THIS TIME IT IS DIFFERENT.

Tue, 06/25/2013 - 16:49 | 3692351 syntaxterror
syntaxterror's picture

All this insight proves is that the world's 2nd largest communist party will furiously manipulate the bond market back onto it's bubble trajectory.

Tue, 06/25/2013 - 16:53 | 3692358 Seasmoke
Seasmoke's picture

What would Dick Fuld do ???

Tue, 06/25/2013 - 16:54 | 3692361 Unprepared
Unprepared's picture

Duck and Fold?

Tue, 06/25/2013 - 16:56 | 3692368 Wanton1
Wanton1's picture

Boy, it's a good thing these clowns can't lie to the American public,

Or we'd be in a ton of trouble.

 

Tue, 06/25/2013 - 22:04 | 3693150 Zigs
Tue, 06/25/2013 - 16:57 | 3692370 SillySalesmanQu...
SillySalesmanQuestion's picture

Puzzling punishment...

Tue, 06/25/2013 - 16:58 | 3692372 youngman
youngman's picture

So that explains the drop in gold and silver....WTF...everthing is dropping...go figure...what is the safe haven now...paper fiat....blows my mind..

Tue, 06/25/2013 - 17:12 | 3692399 The Shootist
The Shootist's picture

You use good sense and logic?

BOHICA!

Tue, 06/25/2013 - 17:32 | 3692451 bluskyes
bluskyes's picture

Nobody should expect anything rational from an irrational market. It's irrationality will outlast most investor's solvency.

Tue, 06/25/2013 - 18:47 | 3692680 Herd Redirectio...
Herd Redirection Committee's picture

Reasons to avoid leverage, options, etc.

Wed, 06/26/2013 - 09:03 | 3694255 tarsubil
tarsubil's picture

Nickels.

Tue, 06/25/2013 - 17:03 | 3692382 ebworthen
ebworthen's picture

And this would mean that deriviatives have to be unwound and that someone will be left without a chair, no?

Tue, 06/25/2013 - 17:06 | 3692390 fonzannoon
fonzannoon's picture

ebworthen for whatever it's worth...I don't think we are there yet. I don't know that factors in China that could spark an avalanche, but when it comes to rates I believe we gotta be over 3% on the 10yr before bodies start floating to the surface. With mark to unicorn and shadow bullshit it could be more.

Tue, 06/25/2013 - 17:12 | 3692400 Bay of Pigs
Bay of Pigs's picture

I thought it was hard to swim with cement shoes?

Tue, 06/25/2013 - 17:16 | 3692408 fonzannoon
fonzannoon's picture

BOP I think the trait most frequently observed on here by everyone, myself included, is that we spike the football on the 2 yard line.

The best part, and to show how crazy we all are...is that we have been spiking the football the last $400 down in gold (phyz vs paper). We really are some crazy assholes! Hopefully we will be rewarded.

Tue, 06/25/2013 - 17:24 | 3692429 Bay of Pigs
Bay of Pigs's picture

Good one fonz...I'm old enough to remember who started the "spike" in pro football (Elmo Wright). 

http://www.youtube.com/watch?v=RLj01vphhRg&feature=player_detailpage#t=585s

Tue, 06/25/2013 - 17:14 | 3692407 kaiserhoff
kaiserhoff's picture

Yup.

As a life long accountant, let me assure you that there is no real accounting going on in the banks.  It's all back to cash flow and margin calls.  So when the shit hits, it will be a storm.

Tue, 06/25/2013 - 20:27 | 3692902 Almost Solvent
Almost Solvent's picture

There's been no real accounting for anything in this world since at least 1950s - some would argue the 1850s. 

 

It's good to be in something from the ground floor. I came too late for that, I know. But lately I'm getting the feeling that I came in at the end. The best is over. 

Tue, 06/25/2013 - 17:21 | 3692424 WAMO556
WAMO556's picture

Who says that we aren't there all ready.

As a matter of understanding-and historical fact: who could predict the implosion of the Soviet Union?

Those folks that were in charge (politburo, KGB and GRU) kept that info to themselves: "we are strong" while at the same time putting into place plans (aka PACE - primary, alternate, contingency and emergency) (continuity of government - COG)

Assume that Your information and communications have been compromised so that the herd does not get to skittish.

Tue, 06/25/2013 - 17:31 | 3692446 Its Only Rock N Roll
Its Only Rock N Roll's picture

Its not the absolute level of yields but the speed of change and the length they remain there.  3% would not hurt many per se if there was a deliberate and slow march up there as one can adjust/hedge in an orderly fashion.  The move that we have had across the curve has been dramatic enough to inflict damage...as long as we hold bleed higher here, which is what I think is going to happen. 

Think of how many levered books didn't hedge because they felt/knew/believed "the Fed has my back on highger rates".

Tue, 06/25/2013 - 17:44 | 3692492 ebworthen
ebworthen's picture

fonzanoon said:  "I don't think we are there yet."

I hear you.  Too much central bank liquidity for the avalanche at the moment and rates not high enough to force hands.

This has to mean something pretty big though, perhaps just a level of fear of an avalanche and trying to get ahead of the possibility (?).

I was absolutley depressed this morning to see the markets up and the phoney "good news", until the Case-Shiller "biggest jump in prices of the index ever" news and that rates were still going up.

Tue, 06/25/2013 - 17:52 | 3692514 disabledvet
disabledvet's picture

what do you mean "we aren't there yet"? that's why i pointed out Greece before it became what is now known as "Greece" or "the nation that used to be known as Greece." that "former country" still is. The most recent version appears to be "Cyprus." And now we have (insert drum roll here)....CHINA. hmmm. "the hits keep coming." i'm sorry...you're wondering why you'r not a billionaire yet? "there was a time when winning was measured by cities, states and nations taken on the map." it would appear in this day and age it's all about dollar amounts and "interest compounded." us plebes..."we get less than 1 percent"...or worse.

Tue, 06/25/2013 - 17:55 | 3692522 fonzannoon
fonzannoon's picture

what really chapped my ass was when I spoke to a few people who trade credit after the case/shiller and I told them they must be gearing up for a selloff and they said "nope we have all buyers".

Unreal

Tue, 06/25/2013 - 20:33 | 3692912 gatorengineer
gatorengineer's picture

zirp carry trade.......

Tue, 06/25/2013 - 20:52 | 3692945 fonzannoon
fonzannoon's picture

there are a lot of people out there who think bonds are oversold. I don't know if they are. I know one thing. Give me 15bps down so I can unload please....

Wed, 06/26/2013 - 00:17 | 3693592 disabledvet
disabledvet's picture

"not all debt is created equal." especially vis a vis equity. unlike debt equity ITSELF does not suffer from a problem of "opaque pricing." simply put "it's a public difference between a bid and an ask and the most invasive media in world history to make sure it stays that way." the same obviously is not true of debt. for that we can only measure "it's" value vis a vis the stock prices of said banks. in this iteration of "we can't unload" it appears China is bearing the brunt. but since the time value of "truth" is great enhance due to the internet that clearly puts a premium in the equity space. and one look at the debt markets right now saws i'm right: spreads have EXPLODED over there. WE CANNOT DIVINE THE FUTURE...however, we can divine...in fact we can QUANTIFY risk...VERY EASILY. forget "VaR" and simply look at the spread. if you're trading treasuries right now that spread is MASSIVE. the idea that this doesn't create immediate uncertainty across ALL asset classes has been immediately disproven. in other words "treasuries are God" and all other asset prices adjust accordingly. the first to respond is the King...as in currencies and the dollar. if treasuries, equities and the dollar had tanked THEN you would have seen some fireworks. can that happen still? yes. but you have to do some inventory work before you go there...and right now there is so much productive capacity located inside the USA right now it's really hard for me to imagine the US dollar collapsing here. having said that obviously the "cost of doing Government" has just risen dramatically. is the genie out of the bottle? we shall see.

Tue, 06/25/2013 - 17:08 | 3692392 espirit
espirit's picture

There will be moar chairs if a few bodies are pushed out of the upper floor windows during the game.

Tue, 06/25/2013 - 17:09 | 3692393 cougar_w
cougar_w's picture

A derivatives unwind means everyone gets a chair, except it's a deck chair on the Titanic just as the stern slips beneath the waves.

Tue, 06/25/2013 - 17:16 | 3692410 kaiserhoff
kaiserhoff's picture

At least the band will play until the end.

Tue, 06/25/2013 - 17:24 | 3692434 tvdog
tvdog's picture

But it's going to be nothing but pop crap.

Tue, 06/25/2013 - 17:36 | 3692461 Its Only Rock N Roll
Its Only Rock N Roll's picture

That is awesome...a bitchin' rendition of Pink's "Just Give Me a Reason" done by a 16 piece orchestra!

Tue, 06/25/2013 - 17:57 | 3692527 neidermeyer
Tue, 06/25/2013 - 23:56 | 3693540 lakecity55
lakecity55's picture

+10!

Tue, 06/25/2013 - 17:54 | 3692517 disabledvet
disabledvet's picture

i thought it was all about a bed and "slipping between the...

Tue, 06/25/2013 - 17:09 | 3692394 q99x2
q99x2's picture

Dude Lehman was before Stock Market Indexes were hard wired to the FEDs systems.

BTFD. You heard me BTFD. It is truly different this time.

If the FED lets the market fail they are toast. They will not let that happen until they are ready.

Washington is in a shitload of hurt and predatory systems are already moving in to tear at the cracks.

All those globalists and FEDs that you see taking strong positions against Snowden, Benghazi, AP targeting and IRS wiretapping are the traitors that are rapidly losing credibility in the eyes of the World. Everyone is pouncing on these creeps and they will fall quickly as their system which is supported only by mercinary loyalty goes down in a Snowden snowball to hell. Back to the ninth circle ChairSatan Bernanke. Be gone.

Tue, 06/25/2013 - 17:12 | 3692398 fonzannoon
fonzannoon's picture

are you saying to btfd in stocks, bonds, or both?

Tue, 06/25/2013 - 18:14 | 3692583 Al Huxley
Al Huxley's picture

Just by DUST, short GLD and you'll be fine, rolling in USDs.  GLD lost 16 tons of inventory today, on below average volume, I wonder where that inventory might be going....  Well, I'm sure there's a good explanation, maybe they needed some extra paperweights.

Tue, 06/25/2013 - 18:21 | 3692609 fonzannoon
fonzannoon's picture

Al they are pulling those inventory numbers out of their ass. Probably to get us to go buy more phyz and then hopefully cough it back up $300 lower.

Tue, 06/25/2013 - 18:29 | 3692632 Al Huxley
Al Huxley's picture

Maybe, that's why I say, short GLD and buy DUST.  If there is only one lock in this market, one thing more certain than the inevitability of death, it's that GLD is going down, and for every 1% it falls, GDX drops 5, which means dust is up 15%.  That's pretty much daily...

Tue, 06/25/2013 - 17:13 | 3692401 cougar_w
cougar_w's picture

There is nothing for it now but war.

Tue, 06/25/2013 - 17:18 | 3692415 buzzsaw99
buzzsaw99's picture

Does this mean that Ann Margret is NOT coming?

Tue, 06/25/2013 - 17:32 | 3692449 Antifederalist
Antifederalist's picture

Funny. What is source for that quote? Knew but forget.

Tue, 06/25/2013 - 17:37 | 3692475 Professor Fate
Professor Fate's picture

But can the "Bernank of OZ" actually do anything about the "Great Unwind" once it starts? Me thinks not. Can Broke-Ass Japan buy our 3% treasurys in volume? Will China buy our 3% treasurys in volume? Maybe Greece, Spain, or Italy will step up to the plate.

It is likely we have already stepped over some invisible financial line in the sand which says..."At a 5% 10 year rate, we are insolvent and f*cked". So can the Great Bernank of OZ keep rates this low without the help of a true 30's style deflationary depression? There is no amount you could pay me to sit down into Satan's Chair for the next four years.

Fate the Magnificent

"Push the Button, Max"

Tue, 06/25/2013 - 17:51 | 3692509 buzzsaw99
buzzsaw99's picture

Funding the existing deficit is only part of the problem going forward without the bernank of oz going full retard. If a few trillion move from the short end (zirp), (which it will with the 10y at 3%), then the interest portion of the budget goes up causing a higher deficit even if they cut spending up on crapitol hill, (which they won't). Runaway fukushima meltdown baybee.

Tue, 06/25/2013 - 18:02 | 3692545 cougar_w
cougar_w's picture

They'll be selling bonds to pay the interest on the bonds paying just the interest on the bonds paying only interest on the bonds that funded the Lehman bailouts.

Wait let me look at that again ... yeah I think that's correct.

Tue, 06/25/2013 - 22:48 | 3693315 tip e. canoe
tip e. canoe's picture

that about sums it up actually.

there is no principal, only interest, compounded.

Wed, 06/26/2013 - 00:05 | 3693564 Non Passaran
Non Passaran's picture

I bet that before the last act they will change the rules to either allow the Fed to buy bonds directly OR mandate that pension funds must allocate most of their money in UST's. Or something like that.

> Can Broke-Ass Japan buy our 3% treasurys in volume?

Why not? They just need to borrow money from the Fed.

Tue, 06/25/2013 - 17:21 | 3692423 Kirk2NCC1701
Kirk2NCC1701's picture

Hey, who still believes in USBs, so who cares?  In the meantime... The Precious keeps on getting spanked.

Just try to BTFD at retail level.  Just I had predicted, the retail market is drying up, and the Fed is the Mother of All Stackers.

And the Gov is Front-Running everybody*.  You gotta admit that even ZH articles and posts help in that regard:  While we got the choice words and blogs, they got the choice cash and choice badges to really BTFD.  First they front-ran us on the ammo purchases, now on gold & silver.  What's next, Chem suits?

Well, gotta fly and p/u the last 10 oz bar and few Eagles.  Later...

 

* / Don't bother getting all excited about this New Reality, till you see a ZH article first. /s

Tue, 06/25/2013 - 17:33 | 3692455 Bay of Pigs
Bay of Pigs's picture

What are you talking about? Gold certificates? Or stealing someone elses gold held at the NYFED?

Tue, 06/25/2013 - 20:04 | 3692855 Kirk2NCC1701
Kirk2NCC1701's picture

BoG, I'm saying that the MFers are 1st in line for bullion with domestic mints.  The scary part is, they drive down the paper price, while snapping up the discounted bullion before anyone else can.  And leaving a trickle for the rest -- just barely enough to avoid an outright panic, but not enough for most ppl.  Lucky for us the "Consumer CONfidence is up.  The most in 5 yrs.", or so the NPR guys said.

Just returned from the PM shop and supplies were very low:  Only some foreign PM.  And the only reason they even had some Ag Eagles, was because some guy came in this morning to cash in a bunch to -- get this! -- "make payroll".  Get the JPG?

Tue, 06/25/2013 - 23:45 | 3693510 lakecity55
lakecity55's picture

My dealer could only get some NTR Buffalo rounds-- a few rolls-- no bar bullion.

Then, after I bought one, the rest were gone.

He had plenty of bars, no more, rounds are running out. He told me to get what I can now, and he meant like pretty darn soon.  He also said he was personally about 95% out of cash, using only enough to supply various needs.

I wonder what is left at Silvertowne now? I will check tonight.

Tue, 06/25/2013 - 17:23 | 3692432 thismarketisrigged
thismarketisrigged's picture

i hope there is a bloodbath in asia tonight and then spilling over to europe and u.s tomm.

 

when i say blood, i mean at least 5 plus percent intra day losses, not 1 percent losses.

Tue, 06/25/2013 - 17:35 | 3692459 The Shootist
The Shootist's picture

Shanghai's 5.6% retracement last night on a rumor of help was absolutely the most retarded thing I've ever seen.

Tue, 06/25/2013 - 18:15 | 3692584 thismarketisrigged
thismarketisrigged's picture

agreed, it was absolutely ridiculous.

 

i went to sleep at around midnight eastern time zone,  and at that time, asia had been pretty much either flat or up modestly, such as the hang seng and nikkei. also, futures at beginning of night were up modestly.

 

all the sudden like 10 pm eastern or so, i notice futures start to drop and asia went red pretty quickly.

 

so i told deff thought today would be a bloodbath. then when i wake up at 6 am eastern timezone, i see dow futures are up 80 pts and i was thinking wtf is going on here. that is when i saw this absolute bullshit rumor that was only said so that markets can come all the way back.

 

its such fucking bullshit.

 

as for tomm, dont worry, even if asia is red tonight, at 8 am eastern on cnbc, they are having that douchebag fed member from minneapolis on, kocherlakota, so if the futures are god forbid red, he can talk it up to green, like david tepper did last month on cnbc.

 

its all bullshit, but it will make it that much sweeter when this whole thing collapses. it will be worth the wait.

Tue, 06/25/2013 - 18:16 | 3692591 fonzannoon
fonzannoon's picture

i would have went with a kutchacockoff joke there but that's just me,

Tue, 06/25/2013 - 18:02 | 3692548 buzzsaw99
buzzsaw99's picture

with a nic like that you must realize that even if there is a bloodbath it is only because "they" allow it

Tue, 06/25/2013 - 21:20 | 3693023 chump666
chump666's picture

You want 2% across the board (Asia sans Japan) with at least 10%+ bids on DXY and USD futures.  The US markets should be down over 5 % due to rising yields and bond dumps.  It's not.  Meaning HFTs are all connected to the EUR buying and USD selling, so the MA's (stocks) are all supported = Fed is printing large and/or NY Fed is revving up short term liquidity pumps to ALL central banks, accept China.  This market is NOT short, 1% sells on S&P and Dow are nothing. 

 

Tue, 06/25/2013 - 17:34 | 3692458 Totentänzerlied
Totentänzerlied's picture

For what it's worth, they aren't done yet. They're not about to let some stupid bonds blow up the greatest heist in human history.

From their perspectove, there is no reason not to buy up the entire curve - when the time is right.

The pain-train has only just left the station, it is not even at speed yet.

Tue, 06/25/2013 - 19:10 | 3692743 Herd Redirectio...
Herd Redirection Committee's picture

They like to whipsaw people, shake them out of their positions.  If you are selling bonds now they are laughing at you.  If you sell precious metals now they are laughing at you.  If you are short the market right now they are laughing at you (IMO).

Tue, 06/25/2013 - 21:01 | 3692961 Totentänzerlied
Totentänzerlied's picture

I agree, they are laughing at us for many, many reasons, namely for playing their game and keeping them so comfortable - the laughter of contempt.

Tue, 06/25/2013 - 19:11 | 3692746 Jake88
Jake88's picture

They've only got so many fingers. They can't plug the dike forever.

Tue, 06/25/2013 - 18:08 | 3692565 lolmao500
lolmao500's picture

Meh, Ben should just go for negative interest rates... that'll fix everything.

Tue, 06/25/2013 - 18:17 | 3692593 Al Huxley
Al Huxley's picture

He would love that, would you mind picking up the slack in the bond buying to make that happen?  He's carrying quite a few now, and feeling like maybe he's had enough for now.  After all $40 billion / month is quite a lot, especially on top of $45 billion in worthless mortgage securities (or do I have those numbers backwards?).  No wonder he's full.

Tue, 06/25/2013 - 21:14 | 3692999 Totentänzerlied
Totentänzerlied's picture

I do believe this is just the planned appetizer. If the plan holds up, we've still got the remainder of a fine mutlicourse dinner, plus dessert, after-dinner drinks, and cigars.

He can pick up his own slack, well he and his PD buddies. Obviously they're trying to delay that option as long as possible, but it is nevertheless an option, and it will get the job done for a while.

Incidentally, the next leg down does not involve a wealth-effect, it is the kid-gloves coming off. For example, force PDs and all funds to hold (more) treasuries, stock market tanks, but "it's for the greater good".

The luxury of the illusion of normalcy (equities closing green every day) is soon going to be unnafordable for the Fed. But that is not the end, it is only the start of the next phase. Another Lehman moment, another round of extraordinary measures, etc.

Also, war.

Tue, 06/25/2013 - 21:04 | 3692964 noless
noless's picture

.

Tue, 06/25/2013 - 21:02 | 3692965 noless
noless's picture

Why not just make payroll taxes negative while you'r at it?

Tue, 06/25/2013 - 18:17 | 3692594 ...out of space
...out of space's picture

did someone overlay a sp500 with a TIPS. are Tips leading the way?

Tue, 06/25/2013 - 18:35 | 3692645 mutty
mutty's picture

I think the 30 year bull market in bonds over. It peaked in summer of 2011. If it's like the last time, and the time before it, we can expect 30 years of negative real return from longer (10+) year bonds.

In short, fixed income mostly jacked. Chairmen ben will keep a lock on short term rates so that the government can finance grandma and grandpa Kettle's retirement, and spying programs (on the same Kettle family), and wars. They don't pay enough to bother anyway.

 

Go long! Go Credit! Reach for (the soap) yield!

Tue, 06/25/2013 - 18:40 | 3692661 falak pema
falak pema's picture

As one speculator confused by the market convolution confided to the other, referring to a third whom they hated and whose face was covered in smiles at having made a killing while the other two had bled like bleating sheep, in a market that no rational better could fathom :

"Lets BTFD now. With his clever short play he'll regret having got out of the market to his dying day, if ever he lives that long." 

 

Tue, 06/25/2013 - 19:03 | 3692728 Jake88
Jake88's picture

Wrong. All the short players have been flat broke for many months now.

Tue, 06/25/2013 - 19:00 | 3692721 Jake88
Jake88's picture

when the masses look at their 401k statements for June the panic will be real.

Tue, 06/25/2013 - 21:51 | 3693104 Bear
Bear's picture

It will be for me with 50k in PIMCO Total Bond Fund ... make that 40k now

Tue, 06/25/2013 - 23:53 | 3693529 Non Passaran
Non Passaran's picture

You could have bought gold miners like I did and lose 25% long time ago. :-)

Tue, 06/25/2013 - 19:09 | 3692738 ekm
ekm's picture

This is all setup to fall to cause maximum damage.

It can all be blamed on Bernanke on the political side.

 

Necessary cathartic collapse is about to occur. It is a good thing, not a bad thing, same as in 2008, totally preplanned

 

 

Tue, 06/25/2013 - 19:16 | 3692761 Money 4 Nothing
Money 4 Nothing's picture

Agreed.. but, blaming Bush is always on the table. Not that Bush 1 or 2 should be revered in anyway. Just a convient out.

Fix the problems of the proceding and stop playing them forwards with excuses.

Tue, 06/25/2013 - 23:47 | 3693519 Non Passaran
Non Passaran's picture

Screw Bush, Rubio and McCain are just as shitty Republicons as any.

Tue, 06/25/2013 - 19:31 | 3692795 Oldwood
Oldwood's picture

Probably no small coincidence that

"USA is Number 1 in the world for the annual prevalence of all drug usage"

Luckily no one is paying attention, just waiting for their next drop and a bag of Doritos.

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