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Market Mania Tapered In Quiet Overnight Session

Tyler Durden's picture




 

It's almost as if the manic-depressive market has gotten exhausted with the script of surging overnight volatility, and following a week of breathless global "taper tantrumed" trading, tonight's gentle ramp seems modest by comparison to recent violent swings. With no incremental news out of China, the Shanghai composite ended just modestly lower, the Nikkei rushed higher to catch up to the USDJPY implied value, Europe has been largely muted despite better than expected news out of Germany on the unemployment front. This however was offset by a decline in Europe's May M3 (from 3.2% to 2.9%) while bank lending to NFCs and households simply imploded, confirming that there is no hope for a Keynesian, insolvent Europe in which there isn't any credit creation either by commercial banks or by the central bank (and in fact there is ongoing deleveraging across the board). US futures are rangebound with ES just shy of 1,500. We will need some truly ugly data in today's economic docket which includes claims, personal income/spending and pending home sales to push stocks that next leg higher. To think the S&P could have been higher by triple digits yesterday if the final Q1 GDP has just printed red. Failing that, the Fed's doves jawboning may be sufficient for a 100+ DJIA points today with Dudley, Lockhart and Powell all set to speak later today.

All the headlines that's fit to bulletin, via Bloomberg:

  • Dollar mixed versus most major peers ahead of consumer spending, personal income and jobless claims data that are forecast to improve; GBP/USD falls to lowest since June 3 after U.K. GDP misses ests., and EUR/USD rises as euro- area economic confidence beats ests.
  • Today: U.S. initial jobless claims for last week and May personal income, personal spending due at 12:30GMT/08:30 NYT, with ests. showing better readings than previous period; also U.S. May pending home sales due at 14:00GMT/10:00 NYT
  • GBP/USD falls to three-week lows after U.K. GDP report misses expectations; disposable income drops most in 25 years
  • EUR/USD keeps trading above 1.30 as euro-zone June economic confidence better than expected
  • EU finance chiefs reach deal on how to handle failing banks
  • Japanese investors were net sellers of foreign bonds during week ended June 21, selling 1.19t ($12.1b) in overseas bonds and notes, most since April 2012; bought 13.9b yen in overseas stocks
  • Ireland’s 7-year EU loan repayment extension positive: Moody’s
  • Chris Bowen named Australian Treasurer, replaces Swan as Rudd is sworn in as new prime minister
  • Sweden’s state-backed export bank is warning businesses not to rely on weaker krona to support their sales abroad, even after the currency sank to lowest in a year against euro
  • The jolt Premier Li delivered to China’s financial system emulates a playbook crafted by predecessor Zhu Rongji in 1990s, inflicting short-term pain in anticipation of longer- term gain
  • New Zealand’s central bank said it isn’t appropriate to raise rates at the moment, is “seriously considering” using other tools to curb housing boom

MARKETS

  • Dollar Index at 82.99, +0.01%; still above 50-DMA at 82.58
  • EUR/USD rises +0.08% with euro-zone confidence data better than expected
  • GBP/USD touches lowest since June 3 after GDP, current account data disappoint, recently at 1.5268
  • USD/JPY 0.39% to 98.11
  • U.S. 10Y yield -2bps to 2.51%
  • Bunds, gilts rise in line with Treasuries
  • Peripheral bonds add to yday’s gains; Italian 10Y bond yield declines -16bps to 4.54%
  • Asian indexes rise, Chinese stocks fall
  • Nikkei 225 rose +2.96%
  • Euro Stoxx 50 -0.20%, snaps two consecutive days of gains
  • Dow, S&P500 futures contracts higher
  • WTI, metals up; gold rises after three consecutive days falling

DB's Jim Reid summarizes quickly the overnight market action so far:

In terms of overnight markets, solid gains are being recorded across all the major Asian bourses following the strong lead-in from Wall St yesterday. Most equity indices are up 1-2%. The KOSPI is outperforming (+3.1%) and EM sovereign credit continues to gap tighter.

Interbank liquidity conditions continue to ease in China, but reports keep filtering out about constrained access to funding in the real economy. Yesterday, it was reported by Chinese news agency Caixin that a number of branches of the big four banks had halted lending to businesses and individuals apparently “due to mounting liquidity pressures” (Caixin). At a micro-level, reports suggest that a number of corporates in cyclical sectors are finding bank funding difficult to come by which is a situation that has persisted for a number of months now. So we'll have to watch out for the impact of this in the data over the next few weeks. Turning to the day ahead, we have a busy data calendar which includes an update on German unemployment, euroarea money aggregates and Eurozone confidence readings. In the US, jobless claims, pending home sales and personal income and consumption are the main highlights. There are a number of Fed speakers lined up to speak over the next couple of days which will probably garner some attention.

The Fed’s Dudley, Powell and Lockhart are scheduled to speak at separate events today. Dudley and Powell are voting FOMC members so it will be interesting to hear their latest thoughts.

SocGen recaps the macro highlights of the day

The ECB's verbal intervention worked to a tee yesterday and Spain in particular will be breathing a sigh of relief over the turnaround in 10y yields. Having touched 5.13% early on and briefly threatened to extend on a break of the 200d moving average, yields suddenly turned south as first ECB president Draghi, then council members Noyer and Mersch, talked up the bank's dovish stance and the importance of the OMT. If this game of cat and mouse is played out over the summer it will make participants wary of shorting the periphery, but nearly a year on from Draghi's ‘whatever it takes' comment, it is a demonstration of the ECB's intent to prevent eurozone borrowing costs rising in tandem with those in the US. The rise in short-term funding costs for Spain, echoed in Italy where 6-month bills were sold yesterday at double the rate of May (1.052% vs 0.538%), with no return to positive GDP growth this year, would be a menace for confidence if left unchecked. The importance of the OMT as a policy tool continues to be vigorously defended, but let's not forget that its effectiveness (not one euro spent so far) may stand or fall with the German court decision. A negative ruling would not make it unreasonable to expect new ECB accommodation. One week before the 4 July ECB meeting, was it that uncertainty that dragged EUR/USD below 1.30 yesterday? One-year bunds are trading back at 0.10% vs a 0.212% high last week, a substantial 50% move.

The political unrest in Australia is nothing like what has been observed in Turkey and Brazil lately, but the leadership contest which has put Kevin Rudd in command means early elections are now mooted for late August. The AUD took the news in its stride yesterday and posted decent gains pretty much across the board. Mining companies will not think back fondly of PM Rudd (2007-2010) as he was one of the architects of the ‘resource super profit tax' (RSPT). However, it is under Rudd and thanks to 425bp worth of rate cuts that the Australian economy averted recession post-Lehman. There may be more easing down the pipeline, but there is no obvious reason to mark the AUD down because political winds are changing.

A busy calendar today features eurozone confidence and M3 credit data, Italian debt supply, French consumer confidence and German unemployment. Another four ECB members are scheduled to speak and we have pencilled in a 19k drop in US initial claims and a 5% mom jump in US pending homes sales.

 

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Thu, 06/27/2013 - 06:50 | 3698476 RaceToTheBottom
RaceToTheBottom's picture

Even algorithms get tired

Thu, 06/27/2013 - 07:25 | 3698492 GetZeeGold
GetZeeGold's picture

 

 

Generational theft is exhausting work.

Thu, 06/27/2013 - 07:20 | 3698514 stocktivity
stocktivity's picture

Until Benny stops the printing, It's all Bullshit!!!

Thu, 06/27/2013 - 07:29 | 3698524 Bearwagon
Bearwagon's picture

And if he ever stops printing --> all the more!

Thu, 06/27/2013 - 07:21 | 3698516 slaughterer
slaughterer's picture

Dove Fed jawboning + $5-6 billion POMO + 2H window dressing => ES ?

Thu, 06/27/2013 - 07:28 | 3698521 Headbanger
Headbanger's picture

OT:  Things getting a little rough in Beijing:

http://www.businessinsider.com/american-ceo-chip-starnes-hostage-china-2...

Thu, 06/27/2013 - 08:47 | 3698661 SheepDog-One
SheepDog-One's picture

So all we need now is really REALLY bad economic news, and we're just fine!

Ok, got it.

Thu, 06/27/2013 - 06:55 | 3698477 Element
Element's picture

 

 

The political unrest in Australia is nothing like what has been observed in ...

If Kev's hair gets messed-up there's going to be one helluva hissy-fit

... and plenty of "detailed programmatic specificity" heaped on top!

Thu, 06/27/2013 - 06:56 | 3698478 fonzannoon
fonzannoon's picture

Bond yields look like they are rallying all over the world. It's summer. Everyone take a few months off and let's circle back to this "crisis" sometime after Labor Day.

Thu, 06/27/2013 - 09:09 | 3698708 Jake88
Jake88's picture

wtf

Thu, 06/27/2013 - 07:00 | 3698486 BandGap
BandGap's picture

Or, it's always calm before a storm, or we're in the eye of the hurricane.

In my experience, no news isn't necessarily good news. People are still doing what they do.

Thu, 06/27/2013 - 07:07 | 3698491 fonzannoon
fonzannoon's picture

I felt that way until two days ago. But then the PBOC came out in the middle of a "Lehman" type liquidity crisis and they......said words....

Words

and that was it. Yesterday Goldman said some more words, and now it's all good. Europe about to blow up? Have Draghi say some words. Interest rates in the U.S spiraling out of control? Words

So maybe these "crisis" are all manufactured to create some volatility which can be easily squashed by words. 

Thu, 06/27/2013 - 07:34 | 3698531 ThunderingTurd
ThunderingTurd's picture

That's very well put. I was having a discussion with an über bull about markets in the midst of the recent pullback. I was outlining all that was going on and he said, "but you know the powers that be will talk the market higher". Shame on me for getting duped once again regarding fundamental weakness in the system is important.

Thu, 06/27/2013 - 07:41 | 3698544 fonzannoon
fonzannoon's picture

I look at that chart Tyler puts up showing how long the different reserve currencies have lasted. if you look at where the U.S presently stands, and stretch it another .00001 millimeters out, that's pretty much my entire adult lifetime. I think about that. a lot.

Thu, 06/27/2013 - 07:39 | 3698540 Non Passaran
Non Passaran's picture

Fonz but that's what they always do.
I don't think the mini confidence crisis was manufactured, it was the amateurish media appearance by Ben when he said things like "we are puzzled .." but now after a bit of PR BS everything's "fine" again.

This time Ekm has been the boldest among resident doomers, but it seems to me soon he'll be proven wrong.

By the way, German unemployment dropped. Could be the good news as it shows the growing gap between Germany and the rest, but it could be interpreted as a sign of euro zone recovery too.

Thu, 06/27/2013 - 07:59 | 3698567 fonzannoon
fonzannoon's picture

It's been months since Ekm said weeks and weeks since he said days. We had Syria, now China. I basically agree with his premise. But to timestamp this stuff is not easy. I just see crude sitting there above $90 for what seems like ever now. I am by the water in NYC. I see luxury boats burning fuel as the people cool themselves off by waving $100 bills. This ain't about the little guy.

If I could go to one place today, I would go to Brazil. I would like to see what a million, organized, pissed off lower/middle class looks like with my own eyes.

Thu, 06/27/2013 - 08:04 | 3698583 ekm
ekm's picture

Still stand by it.

Somebody somehow will make the right decision as they made it with Lehman.

Except for in places close to where money is printed, the rest is dying.

The world is dying.

 

Somebody, somehow......

 

 

 

Thu, 06/27/2013 - 08:09 | 3698592 fonzannoon
fonzannoon's picture

When you say "the right decision"..

By "right" do you mean the right decision for the general population and the economy? Or by "right" do you mean right decision for the banks to create a crisis that screws over everyone except themselves who use the crisis to extract more wealth from the system and gain more power.

Let's define "right decision".

Thu, 06/27/2013 - 08:15 | 3698606 Bearwagon
Bearwagon's picture

I think that the aforementioned 'somebody' may not be thinking much along the lines of "right and wrong" or "good and evil", but rather along lines like "we and the others" and "dead or alive".

Thu, 06/27/2013 - 08:17 | 3698610 ekm
ekm's picture

Prioritize the real economy over the banks like Bush did in 2008 and killed Lehman, but he was on the way out at the time, it was easy for him.

Thu, 06/27/2013 - 08:24 | 3698623 fonzannoon
fonzannoon's picture

Since 2008 millions of people have lost their jobs, benefits and savings. If they were lucky they have since found a lower paying job with less benefits. Their debt has increased and their cost of living is still the same, except they have less income to sustain it.

7,500 people have been arrested for protesting against the banks. The banks are bigger and more powerful than they were before. Maybe 1-2 bankers have gone to prison. Take a look at the article about the guy who scribbled some crap about one of the banks in chalk recently. I am probably going to stop talking about this because I am becoming more uncomfortable by the day discussing this. It's best for me to shut up, pay my taxes and watch the ballgame, because the alternative is becoming more apparent by the day. As a matter of fact that is most likely what I am going to do. Factor that into your analysis of where this place has already gone, much less is going.

Thu, 06/27/2013 - 08:36 | 3698643 ekm
ekm's picture

I don't think so.

We'll see, we'll see

Thu, 06/27/2013 - 08:52 | 3698674 game theory
game theory's picture

I just looked that story up - I hadn't heard about it at all. The courts are preventing a 1st amendment defense!

Thu, 06/27/2013 - 09:15 | 3698726 Jake88
Jake88's picture

What flavor was the cool aid. Was it bitter almond.

Thu, 06/27/2013 - 09:17 | 3698731 ekm
ekm's picture

As I said, USA going full soviet is not part of my analysis.

Thu, 06/27/2013 - 09:21 | 3698739 fonzannoon
fonzannoon's picture

why not?

Thu, 06/27/2013 - 09:25 | 3698753 ekm
ekm's picture

it's too painful, been there done that

 

I just can't see that happening

Thu, 06/27/2013 - 08:00 | 3698571 ekm
ekm's picture

I will be proven wrong if the powers decide to continue like this which I think they won't.

But this will lead to a worsening economy.

 

My analysis is based on the logic that somehow somebody is about to make the right decision, and if they don't, economy will get worse and worse.

 

I do not see this as 'market forces working', I see this as government forces making decisions since markets are dead.

 

Hence, myself being proven right or wrong depends on "government decisions", not markets.

Again, I alwasy hope and assume that somebody somehow will do the right thing, that is the basis of my analysis, and I still think it is about to happen, somebody will do the right thing and allow collapse

Thu, 06/27/2013 - 08:06 | 3698586 fonzannoon
fonzannoon's picture

"Again, I alwasy hope and assume that somebody somehow will do the right thing"

The right thing for who? I admire your optomism in the face of the environment but.....

READ THIS.

"There’s a reason for this. There’s a reason education sucks, and it’s the same reason it’ll never ever be fixed – it’s never going to get any better, don’t look for it, be happy with what you got, because the owners of this country don’t want that. I’m talking about the real owners now. The wealthy big business interests that controls things, and makes all the important decisions.

Forget the politicians, they’re irrelevant. The politicians are put there to give you the idea you have freedom of choice – you don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own, and control the corporations. They’ve long since bought, and payed for the senate, the congress, the state houses, the city halls, they got the judges in their back pockets, and they own all the big media, so they control just about all the information you get. They got you by the balls. They spend billions of dollars every year lobbying – lobbying, to get what they want.

Well we know what they want. They want more for themselves, and less for everybody else, but I’ll tell you what they don’t want – they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that – that doesn’t help them. That’s against their interests. That’s right. They don’t want people that are smart enough to sit around a kitchen table, and think about how badly they’re getting screwed by a system that threw them overboard 30 fucking years ago. They don’t want that. You know what they want? Obedient workers – Obedient workers, people who are just smart enough to run the machines, and do that paper work. And just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime, and vanishing pension that disappear the minute you go to collect it, and now they’re coming for your social security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it – they’ll get it all from you sooner or later cause they own this place. It’s a big club, and you aint in it. You, and I are not in The Big Club.

By the way, it’s the same big club they use to beat you over the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to think, and what to buy.

The table has tilted folks. The game is rigged, and nobody seems to notice. Nobody seems to care. Good honest hard working people: white collar, blue collar it doesn’t matter what color shirt you have on. Good honest hard working people continue (these are people of modest being) – continue to elect these rich douchebags who don’t give a fuck about you. They don’t give a fuck about you – they don’t give a fuck about you. They don’t care about you at all – at all – at all, and nobody seems to notice. Nobody seems to care.

That’s what the owners counted on. The fact that Americans will probably remain willfully ignorant of the big red, white, and blue dick that’s being jammed up their assholes everyday, because the owners of this country know the truth. It’s called the American Dream cause you have to be asleep to believe it.”

George Carlin

Thu, 06/27/2013 - 08:16 | 3698607 ekm
ekm's picture

If USA has decided to go full soviet, this could on for 30 years

This is not a part of my analysis

Thu, 06/27/2013 - 07:59 | 3698569 game theory
game theory's picture

...and when goldman says words, another piece of the american dream dies.

Thu, 06/27/2013 - 07:07 | 3698493 Bearwagon
Bearwagon's picture

"The water is coming!" (Only people who dwell near a shore can realize the real importance of that statement.)

Thu, 06/27/2013 - 07:19 | 3698509 GetZeeGold
GetZeeGold's picture

 

 

Then Al Gore had better sell his beach front property mucho pronto.

 

This message brought to you by the Flat Earth Society....proudly powered by coal, cause solar panels don't work at night.

Thu, 06/27/2013 - 07:24 | 3698517 Bearwagon
Bearwagon's picture

I didn't intend to talk about Al Gore or AGW - I thought of a storm-surge - or high-water spring tide.

Thu, 06/27/2013 - 07:11 | 3698502 Apostate2
Apostate2's picture

Mish mash, or hotchpotch. No clear signals. Market drunk and having a 'lie' down. 

Thu, 06/27/2013 - 07:13 | 3698507 THE DORK OF CORK
THE DORK OF CORK's picture

"no hope for a Keynesian...............

insolvent Europe in which there isn't any credit creation either by commercial banks or by the central bank"

 

Need I remind you the birth of that thought process was when HMT produced 10 shilling notes (with interest) and not the BoE.

Thu, 06/27/2013 - 07:18 | 3698512 max2205
max2205's picture

Make that 1600

Thu, 06/27/2013 - 07:30 | 3698525 highcapacity
highcapacity's picture

Bullish Bitchezzz !!!

Thu, 06/27/2013 - 07:34 | 3698530 WhiteWolf
WhiteWolf's picture

I was schooled in the 80's in Finance & Economics. It is amazing how when the revision of GDP drops 25% Stocks run higher. Alternative universe. Get everyone you know and get their cash out of the banks. If Wall Street can do Asset Stripping on the miners, then we should return their favor and strip the cash assets off their balance sheets.

 

Hi Ho Silver and Gold

 

By the way FU Ben, Tim, Baldy Blanfein (ugliest guy I have ever seen), Jamie, and the rest of you Wall Street SCUM

That goes for POTUS as well!!

Thu, 06/27/2013 - 07:42 | 3698545 Stimulati
Stimulati's picture

Tyler, Europe isn't Keynesian it is practicing austerity. This is pretty basic stuff you are getting wrong.

Thu, 06/27/2013 - 08:13 | 3698602 johny2
johny2's picture

austerity for the poor and bailouts for the rich. 

Thu, 06/27/2013 - 08:31 | 3698636 Stimulati
Stimulati's picture

Does that sound Keynesian to you?

Thu, 06/27/2013 - 08:43 | 3698655 johny2
johny2's picture

It sounds like something going on in USA, EU, China and the rest of the world these days. Keynes has been dead for a long time, and responsibility is with others today.

Thu, 06/27/2013 - 07:42 | 3698546 Ban KKiller
Ban KKiller's picture

Gosh, everything is so transparent...and manipulated to enrich the traders.

Thu, 06/27/2013 - 08:00 | 3698574 spastic_colon
spastic_colon's picture

spoke too soon....ES ramp back in play

Thu, 06/27/2013 - 08:07 | 3698588 EclecticParrot
EclecticParrot's picture

Well, a glance at my trader's calendar this morning, and it appears I should have set the alarm for tomorrow morning instead.  Typical morning inconclusive econ releases, followed by three Fed-Heads (like Grateful Dead fans without the drugs) speaking within a 2 1/2 hour period, with KC Fed Manufacturing and bond auctions thrown in for good measure.  For the algos, you can hear the hexidecimal salivation for miles, louder than for a troupe of mosquitos at a nudist colony.  (Sigh)  Perhaps a good day to alphabetize my spice cabinet . . .

Thu, 06/27/2013 - 08:08 | 3698589 thismarketisrigged
thismarketisrigged's picture

to follow the fed speakers today, cnbc is having lloyd blanfkein on at 4 pm. he should be good for 5-10 dollars upwards on goldman sachs stock.

 

and futures whule maybe quiet overnight, are now starting to be pumped again with dow futures up 60 pts. i can only imagine where they will be when we get the economic data ( why even bother honestly, its not like anyone cares) and then we get the most important part of the day, because in normal markets, the economy should not matter, such as chinese banks about to go under, or europe fucking imploding, but things that really should matter are things like the fed. that is what moves an economy.

 

i hope we see a flash crash today.

Thu, 06/27/2013 - 08:09 | 3698593 johny2
johny2's picture

markets are algos and fed working together to make money for jpm and co. that is all.

Thu, 06/27/2013 - 09:11 | 3698718 carefreemanjoe
carefreemanjoe's picture

The question is whether the Fed knew about the GDP going to be revised downwards to 1.6% from 2.4% at the time of starting its taper talk. If 'Yes' then it indicates to me that the Fed is throwing in the towel acknowledging that the massive Bond buying program is not working. If 'No' then it indicates to me that the Fed is not acting on information and rather using a shoot-from-the-hip approach which is not good at all. I hope they do not announce a massive stock buying program replacing the current massive Bond buying program. That would mean the towel is being thrown completely. Amen.

Thu, 06/27/2013 - 10:10 | 3698913 venturen
venturen's picture

up is down and down is up!

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