Another Late Day Dumpfest Ends Worst Thanksgiving Week Ever For Stocks

Tyler Durden's picture

Stocks plunged at the close for the third day in a row to cap the worst Thanksgiving week ever. US equities seemed in a world of their own for much of the day - especially financials - as all the hope and rumors faded and clearly a large number wanted to be flat or short into the weekend. Across a broad basket of risk assets (CONTEXT), today's equity rally and selloff was pure emotional overshoot and correction as we closed back at reality. HYG once again led the derisking way and credit underperformed equity until the late-day equity sell-off converged them once again. What has been most notable this week - particularly the last day or so, has been the sell-off in Treasuries. The concerns that European entities are repatriating anything and everything should be very worrisome and the volume into the ES close suggests that fear is growing.

CONTEXT was less ebullient though was bid today as broad risk assets moved up on hope and then rolled over on reality once again. The factors were much less correlated than normal - especially treasuries - but the incredible correction back to sanity into the close was quite surprising nevertheless in its relative exactness. We think the lower correlation is also a factor of technical flows and worry that we are heading towards some break that could lead to significant outflows from seemingly low risk trades - something to watch.

Treasury performance today was entirely odd given the sell-off of the afternoon and the relative strength until the last day downgrade of Belgium in EURUSD also suggests that there was heavy repatriation of foreign assets.

Equity and Credit were generally in sync today but HYG led the way once again. The 4th day in a row where HYG was the clear beta leader (red ovals) which fits with the thesis of ETF-stuffing that we have been effusively discussing for a few weeks. Given high-yield credit's further deterioration, we have adjusted our S&P 500 cash index fair-value to 1135 and while we are as close to fair between equity and credit (as equity has snapped back to reality) as we have been in over a month, we suspect if sustained pressure from HYG pushes into secondary HY bonds, credit and equity will repeat the pattern on 2008 and tumble together as if riding an illiquid slip'n'slide.

Its admittedly thin trading after-hours but the major US financials have given up all of their gains with MS, WFC, AMEX, and GE all practically unch and GS and BofA dropping off.

FX markets were a one way street this week as EUR-based flows drove USD strength in almost a straight line - admittedly with some vol - with DXY up over 2.1% on the week and AUD down over 3% against the USD. Finally, into the close, commodities generally sold off quite hard - fully retracing the SNB/Greece 'good-news-silliness' chatter - with Oil and Silver the craziest. What was very notable was the last minute rally in Oil into the close - war premia? Gold modestly underperformed the USD on the week while liquidation appeared more the moves for Silver and Copper.

The week in Europe was clearly the main driver (and rightly so) and is evident in the disconnects this week in European credit and equity. Financials closed just of their wides of the week while the rally into the EU close (well before today's ugliness in US) was led by Main (not XOver) suggesting it was much less risk-on than it might appear. Equities outperformed today - once again seemingly in a world of their own - and given the weak close in the US, we would expect this gap to fill on Sunday's open (as we have seen again and again).

Pete Tchir, of TF Market Advisors, sums the day's headlines in Europe up nicely:

The only logical conclusion is that we are further away from a solution or agreement in Europe than we have been in a long time.  The "Grand Plan" has failed and this time, it is not a matter of creating "bigger and better" versions of prior plans, they need to do something new.  Germany in particular will not relent on "printing" until a real, credible, and implementable plan is on the table.  I think they are weeks away from that.  In the meantime expect support for European sovereign debt to erode.  Italian and Spanish debt are dangerous, but as shorts take some profit there at these yields, they will step up positions in Belgium, France, and probably Germany.

 

The best thing Europe could do is impose some old school "children" rules on the politicians, finance ministers, and various government employees.  They should be told 1) Children are meant to be seen, not heard, and 2) If you have nothing good to say, then don't say anything.  There is enough bad news out there without people like Mersch taking the time to speak.  Would it be that hard to say Draghi is only one allowed to comment on ECB at this stage?  I'm bearish and thankful to Mersch, but really, what was the point of that?

 

Have a great weekend and enjoy the holiday, and get some rest, because this is likely to be a December to remember.

Charts: Bloomberg

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transaccountin's picture

i need mah hopioum fix

CPL's picture

Retail black friday stuff will probably be massaged for Monday morning.

4realmoney's picture

Some insightful comment from Al Jazeera on the deepending Eurozone Crisis, for which Black Friday is just a distraction.

Dow Jones TV  - http://djia.tv

redpill's picture

 Black Fryday is raciss anywayz

Let them eat iPads's picture

I ain't painting my face for nobody.

Freewheelin Franklin's picture

That's Kwanzaa Friday, or somethng. Or maybe Holiday Friday. Not to be confused with Holiday Hotel

 

http://www.youtube.com/watch?v=2U0TT9nSz3I 

Freddie's picture

Sadly the dumb Europeans, as well as other western countries, have been bankrupted by Al Jeezherah's emigrating/invading muslims.  One of them has bankrupted America.  

lotsoffun's picture

but - but - nobody wanted to clean the toilets at the airports.  so we brought one, and he brought the wife, and mamma and papa, and the 5 kids.......

it was fair exchange.

 

 

 

HungrySeagull's picture

And feed and house, to clothe them all on shit wages to boot.

 

Something must be truly fucked up when two of us cannot make it working minimum wage and debt free....

FlyPaper's picture

Freddie:   Oh for Pete's sake.  The problems started in 1913; got wind in their sails in the early 1960s and we were propelled into stupidity by the repeal of Glass-Stegall.    No Muslims involved.  Just socialist-thinking politicians and cronyism.

Frankly, we will soon see that our own banks will have done vastly more harm than 9/11, and far more people will die as a result.  We'll spend a trillion to fiddle with Iraq while our regulators stand by and analyze how the cows got out of the barn door.  

What a mixed-up set of priorities.

Eally Ucked's picture

I agree with your point but also, probably, you noticed that all big and fameous economist alarming about western societies getting older and imidiate need to change demographics to cope with so called "entitlements". All those gov's adopted policy of allowing much bigger immigration. Where all those people are coming from? Do they import people who are ready to be assimilated into western societies at once or they need some time like generation or 2 to get absorbed? What are the cost of such policies, monetary and social? Maybe they should focus on their own populations and somehow encourage citizens to have more kids, oh yes, it needs some more "entitlements" as most contributors of this site call them.   

fonestar's picture

I continue to price in disaster, one silver coin at a time!

end da fed's picture

i love it when silver goes on sale!

The Monkey's picture

Me too. I'm planning on loading up when it hits $3 / oz.

redpill's picture

You misspelled $30 and you'll be lucky if it makes it that far

The Monkey's picture

That would be $3.00, as in 3 dollars.

end da fed's picture

oops, you put a decimal (.) in there

fonestar's picture

I am a ZH'er and I care not for luck, I have fear, mathematics and millions of momos loose on the range!

The Monkey's picture

And most likely, I've kicked your ass for the last 8 years running.

fonestar's picture

warning: deflationist 'tard alert

The Monkey's picture

This tard is sitting pretty.

Hulk's picture

in Mommy's basement, as all tards do...

end da fed's picture

silver 11-24-03 = $5.24

silver 11-24-11 = $31.87

hmmmm...

fonestar's picture

I've been buying since $14/oz myself.  But if I would have continued that coin collection I started when I was seven years old I would be a thirty-three year old retiree now!

end da fed's picture

yes, i wish i'd bought that low too. i only brought up the 11-24-03 silver price because monkey was using the 8 year timeline.. but i'll buy silver and gold no matter the US$ pricetag, as long as i can get my hands on it. i just worry about attempted confiscation someday

fonestar's picture

By the time they are worrying about taking a couple coins and bars off of private citizen's hands (and I don't doubt it will come to that) they will be done anyways.

Game over for Benny and the boys.

end da fed's picture

their "game over" can't happen soon enough for me... i'm so tired

Freddie's picture

Momo's and hedge fund managers "on the range?"  You mean the rifle range and they are the targets?  Nice thought.

fonestar's picture

More along the lines of a combustion engine requires an accelerant to burn.

CrockettAlmanac.com's picture

The Bernank has promised ZIRP through at least 2013.

fonestar's picture

And the market has promised doom before 2013 as a result of the Bernank

Bansters-in-my- feces's picture

Look...!

The Monkey learned to press the green arrow 3 times.

whstlblwr's picture

I agree with Monkey if Bernanke fails with inflation. Also if Ron Paul wins we will get strong dollar, weak commodities.

fonestar's picture

If Ron Paul wins that will be a good thing but nothing will save the US Dollar at this point or restore the faith that has been broken over the past three decades.

whstlblwr's picture

I disagree about dollar, but also forgot of war. War changes equation.

ffart's picture

Ron Paul has pretty much said he wants to kill the dollar as one of his central talking points. Of course he was more political about it, but that's what abolishing legal tender laws would do.

HungrySeagull's picture

It will never see 30 again.

 

If it does....

slewie the pi-rat's picture

if that happens early next week, maybe you will be able to trade straight across for yer BAC stock, you little monkey!

doggings's picture

Eat my BAC shorts money brains. 

Goldilocks's picture

out of nowhere.
hey, at times the second quote gives me great insight. y;o

~//~

Fight Club-

Tyler: Like a monkey ready to be shot into space. [Tyler slaps new recruit in the back of his freshly shaven head] Space monkey. Ready to sacrifice himself for the greater good.

Tyler2 (Narrator): Trapped inside this clockwork of space monkeys.

whoisjohngalt11's picture

So does the Obamarama... did you see his Thanksgiving video wow..???

Freddie's picture

Hope and Change from our beloved muslim.

whstlblwr's picture

Muslim, Jew, nigga. You guys who like the label to pull down, only pull down yourself. I'm guessing also over 50... at least over 50, probably 70. These are words those from the old, small minded generation holds to for sense of worth.

Most muslim seem pretty nice people.

lotsoffun's picture

they are really nice.  bang your forehead on the carpet until you have a big bump - and they will like you more.  if you are female and fancy scarves and clitoral removal - please move to north africa.  besides - the little bump doesn't do you much good?  in fact - please move there.  north africa preferred.  i'm sure you will be well received.  and if you are non- muslim - i'm very sure they will allow you to start opening up a storefront with your preferred religion and practice that.  infact - they might even be dumb enough to subsidize it.

 

whstlblwr's picture

Not the fundamentalist. Fundamentalist of any religion are crazy. Look at Pentacostal here, just as crazy.