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Barclays On The Rally: "Fade It", Because The Summit Is "Not A Game-Changer For The EUR"

Tyler Durden's picture




 

With everyone scrambling to buy into the bathsalts rally, and shorts rushing to cover with a panic bordering on a QE-announcement, it is somewhat ironic that today's voice of muted reason comes from none other than Liebor expert extraordinaire: Barclays, whose suggestion is simple: lock your profits: "We remain bearish on EURUSD, expecting it to grind slowly down to 1.15 over the next 12 months. We therefore suggest investors look to fade this morning's European currency strength versus the USD and non European commodity currencies such as the AUD and CAD." Why? They have their listed reasons. The unlisted ones are the same that every other bank has for becoming bearish recently (we have recently listed Citi, Goldman, SocGen and DB to name but a few): for a real fiscal and monetary policy intervention to take place (i.e., a rescue package that lasts at least a few months, as opposed to today's several day max rally): the market has to be tumbling. That, as we have explained repeatedly, is the only way to get a powerful response. Everything else is (quarter end) window dressing.

From Barclays:

EUR: EU Summit is not a game-changer for the EUR

 

Very little progress, if any, on short-term measures was expected from this week's EU summit. However, the conclusions, so far, have exceeded expectations. Risk has rallied as a result. We expect the general improvement in sentiment to have legs because the measures announced tackle the dislocation in the banking sector. Also, later today further agreements on the roadmap towards fiscal integration are possible.  We suggest investors remain long cyclical, non European currencies, such as the AUD versus the USD. 

 

However, the news overnight is not a game changer for the EUR. The agreement to allow Spanish banks to be directly recapitalised from the ESM is conditional on a single supervisor for euro are banks being established. This is not expected until the latter half of this year. In the interim, aid to Spanish banks will continue to inflate Spanish sovereign debt levels. In addition, headlines this morning have already started to water down the other conclusions reached. For example, the agreement to deny seniority to ESM resources used to recapitalise banks has been limited to Spain and there is no agreement over the seniority of EFSF resources. Similarly, Mrs. Merkel's comments that "countries must fulfil conditions for bond-buying programmes that Troika must check" suggest the agreement on how to implement the conclusions reached is not as strong as headlines initially suggested.

 

As a result we expect investors to remain cautious. This will keep the risk premium on the EUR elevated. Moreover, euro area growth is very weak and structural change takes time. We continue to expect the ECB to keep monetary policy very loose for some time and to cut rates by 50bp next week, a move which is not fully priced in by the market. We remain bearish on EURUSD, expecting it to grind slowly down to 1.15 over the next 12 months. We therefore suggest investors look to fade this morning's European currency strength versus the USD and non European commodity currencies such as the AUD and CAD.

 

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Fri, 06/29/2012 - 15:26 | 2574280 Comay Mierda
Comay Mierda's picture

LIE-bor kings say fade?

BTFD

Fri, 06/29/2012 - 15:37 | 2574333 Divided States ...
Divided States of America's picture

Obviously the LIBOR manipulation wrist slap penalty wasnt a game-changer either because Barclays is still around operating like it cares for its clients and the rest of us.

Fri, 06/29/2012 - 16:07 | 2574453 Randall Cabot
Randall Cabot's picture

EUR/USD did lose 40 pips off the high into the close.

Fri, 06/29/2012 - 16:19 | 2574491 LowProfile
LowProfile's picture

 

We remain bearish on EURUSD, expecting it to grind slowly down to 1.15 over the next 12 months.

I'm betting by this Fall..!

Fri, 06/29/2012 - 19:10 | 2574975 The Monkey
The Monkey's picture

Stocks rallied today, crushing shorts, AGAIN. Everytime a little bit of bad news strikes, here we are, going through every end-of-the-world scenario. Ensure the suckers are loaded up short, betting on the big reset!!!

Fade this rally maybe, but don't be a sucker!

Fri, 06/29/2012 - 21:35 | 2575218 dexter bland
dexter bland's picture

The rally in commodities and the EUR are typical bear market rallies, sharp due to the long period of downtrend and extreme build up of shorts. Give them a day or two to cool down then resume shorting. Stocks aren't yet in a secular downtrend. They may just be bullish, (though I 'd guess not),  but wait and see.

Fri, 06/29/2012 - 15:27 | 2574283 Cdad
Cdad's picture

Uh...confused...being as this comes from the most corrupt bank in the universe.  Double super secret buy signal?  

Fri, 06/29/2012 - 19:29 | 2575020 The Monkey
The Monkey's picture

The bears bit, to the tune of multi-month extreme short interest in the Euro and NYSE, and now the bears are being taken out to the woodshed in a concentrated buying price spike.

With a few hiccups to draw in more idiots, I'll bet this one runs for a while.

GS shorting the S&P ahead of the summit? Come on. This one was handed to everybody.

Fri, 06/29/2012 - 20:02 | 2575074 Umh
Umh's picture

They know that we know that they know that............................

Fri, 06/29/2012 - 15:28 | 2574288 falak pema
falak pema's picture

who in his right mind would quote Barclays, of Barclays soddy peas from Libor market! 

Fri, 06/29/2012 - 15:33 | 2574308 GeneMarchbanks
GeneMarchbanks's picture

Soon, someone, somewhere in London will get on top of that Libor scandal. But first Wimbledon!

Fri, 06/29/2012 - 15:29 | 2574290 Conman
Conman's picture

So we should fade the fade call like Stolper? Hows that Goldman short s&p call working out for the muppets err i mean valued clients? Amazing, anyone tracking the trading desk calls? so far in my head they have been 100% wrong.

Fri, 06/29/2012 - 15:29 | 2574292 resurger
resurger's picture

I will say it one last time :

Short The Fucking Top

before it's too late

Fri, 06/29/2012 - 16:15 | 2574471 Mark123
Mark123's picture

Funny how this rally was on the last day of the month/quarter.  Very odd.

 

I would agree about the short, but do not do it if you have to put in a stop.  That is just feeding the beast.

Fri, 06/29/2012 - 19:36 | 2575038 The Monkey
The Monkey's picture

Why the fuck would anyone listen to you? Shorts were crushed today and there is nothing on the horizon to suggest that sentiment won't move AGAIN to a bullish extreme.

Short now if you want to end up loosing 20%.

The summit finally did what it was supposed to do - get ahead of market expectations. The rally will go further than you think.

Sat, 06/30/2012 - 07:00 | 2575872 resurger
resurger's picture

lol why are you mad ?!

You have to do what you have to do

Fri, 06/29/2012 - 15:29 | 2574294 Splootch
Splootch's picture

of course gbp/usd will end the week at 1.5666...

Fri, 06/29/2012 - 15:31 | 2574303 Tsar Pointless
Tsar Pointless's picture

Let's get fucking serious for just one second here.

IF this glorious summit would have truly fixed Europe's problems - and, in turn, the world's, when you get right down to it - wouldn't you think the S&P would be up more than a measly two-percent? Say, somewhere around 10-percent?

But, it isn't. So, nothing is fixed.

End of quarter=a trip to the store to get some paint to use on the tape.

Fri, 06/29/2012 - 15:53 | 2574391 walküre
walküre's picture

They fixed the problems to live another day.

The way this is playing out is reminiscent of the panic and horrowshow the bankers put Congress through in the fall of '08 in order to get their immediate bailout - or else.

Who are the players in Europe? Well, Draghi of course. A former Goldmanite and member of Mafia. He put the screws to Merkel and what's even more fucked up, every German knows it and sees right through it.

So, this is a repeat of the fall and rise of 2008 or are we any wiser in 2012?

They say they fixed something but is it even enough to kick the can? Doesn't seem that anyone outside of the banking cartel's sphere of influence has any confidence or trust left. Let me rephrase that. Nobody trusts bankers or has any confidence but those inside the sphere have to oblige by their banking overlord's wishes.

This whole spectacle is so bloody obvious, it's painful to watch them try and defend the German sell out and score political points.

Well over 75% of Germans are pissed off. We all understand this is a sellout of Germany's treasury to all other banks and treasuries.

What the fuck is there to cheer about? I think "Europe" is a done deal. In fact, it's synonymous for the ugliest stepchild of Germany ever. Europe is a dead carcass. It stinks. Anything European is no longer desirable.

Don't lump us into one pot anymore. We're German - First and Foremost. You're .. whatever .. and we're sure you are proud of it too. Good for you!

The concept that once was "Europe" is DEAD to us.

Lang lebe Deutschland.

Fri, 06/29/2012 - 15:55 | 2574407 Tsar Pointless
Tsar Pointless's picture

Me? I'm nothing - I'm an American.

I agree. This wasn't the "Summit to save Europe".

It was the "Summit that ensures Europe's demise".

But, that's not as catchy.

Fri, 06/29/2012 - 16:01 | 2574434 NotApplicable
NotApplicable's picture

Oh, rest assured, Europe's being saved. For what purpose though? That's the real question.

Fri, 06/29/2012 - 16:07 | 2574452 Jake88
Jake88's picture

even if we fix the banking and sovereign debt problems europe is slipping into a depression and the US is turning in that direction.  The market should be down 20% even if the euro was guaranteed fixed.

Fri, 06/29/2012 - 16:12 | 2574465 Mark123
Mark123's picture

Look at Nike...problems will come back from Asia to bite the west. 

Fri, 06/29/2012 - 16:34 | 2574562 Strider52
Strider52's picture

Call me stupid, but what exactly changed? From the look of gold today, it sounds like they agreed to print money to save the banks. Is that what happened?

Fri, 06/29/2012 - 15:36 | 2574322 slaughterer
slaughterer's picture

The Fade call = consensus.

Be a contrarian, be a bull.  

Fri, 06/29/2012 - 16:23 | 2574505 ZeroPower
ZeroPower's picture

Yes, flow today here was heavy on people selling XOver and SovX (i.e. long risk), equity guys said lots of money pouring into their respective sectors as well. 

I still hate the fucking Euro though.

Sat, 06/30/2012 - 00:44 | 2575437 The Monkey
The Monkey's picture

I will stick to my call that the S&P won't hit 1422 again this year, but it will come within a nat's hair.

Fri, 06/29/2012 - 15:37 | 2574327 timbo_em
timbo_em's picture

To me the only clear outcome of this summit is that the gap between the FANG and the PIIGSF keeps widening. And I'm pretty sure politicians in northern Europe don't liked to be blackmailed. And since nothing is fixed (ie Spain is lucky when their 2012 deficit without banking recap remains in single digits), I expect more desperation in the periphery and growning tensions in the eurozone.

Fri, 06/29/2012 - 15:38 | 2574338 caimen garou
caimen garou's picture

who knows what these fools are up to,looks like the banks are wanting that qe crack real bad. looks like the DT'S SHAKES AND SHIVERS

Fri, 06/29/2012 - 16:20 | 2574494 Caggge
Caggge's picture

"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild

 

"Give me control of the world's money and I care not who makes it's laws" — Goldman Sacs

They game hasn't changed just the players.

 

 


Fri, 06/29/2012 - 15:39 | 2574343 eclectic syncretist
eclectic syncretist's picture

A 10% jump in one day for the price of oil?  If this is what BS Bernanke is referring to when he says he's focused on the Fed mandate for price stability I'd sure hate to see what happens when prices become unstable!!!!!

Fri, 06/29/2012 - 15:54 | 2574402 you enjoy myself
you enjoy myself's picture

and with droughts going on everywhere you're going to see massive food price inflation at the consumer level in a couple months.

Fri, 06/29/2012 - 16:35 | 2574561 walküre
walküre's picture

Gas prices never corrected in my area from the days when oil was over $100

The 25% drop wasn't reflected in the distillate sector

But I'm sure that after today the prices go up hyper speed

Good luck to anyone putting their hopes on any more QE

 

Fri, 06/29/2012 - 15:40 | 2574344 Vet4RonPaul
Vet4RonPaul's picture

Are we going to see a silver ounce at $50 USD in the next five years or not?  I need to think about cashing in or holding.  Up arrow means 'yes' and down arrow means 'no'.

Fri, 06/29/2012 - 15:43 | 2574360 spentCartridge
spentCartridge's picture

It might make 500 in that time, so a down arrow from me.

Fri, 06/29/2012 - 15:49 | 2574385 Dr. Engali
Dr. Engali's picture

Barclays....jump in shorts so the Bernank can squeeze you again.

Fri, 06/29/2012 - 15:50 | 2574388 you enjoy myself
you enjoy myself's picture

the Fed has insured that the market will never correct, only crash for good.  no one wants to miss out on the next QE so it will be perpetually front-run, all while the underlying economic conditions continue to crumble everywhere.  it wouldn't surprise me in the least to see a negative GDP print, a default from italy or spain, and have the SPX at 1500.

 

Fri, 06/29/2012 - 15:58 | 2574414 kito
kito's picture

well, goldman certainly locked in their profits as they told the world a few weeks back that the markets were heading downnnnn.......

Fri, 06/29/2012 - 15:58 | 2574416 Joebloinvestor
Joebloinvestor's picture

The LIBOR manipulation should fall under a RICO prosecution in the US.

It would be a real example for the US to send, however, most if not all of the banker brotherhood is involved.

I hope Barclays stuck a pin in that.

Every banker for himself now.

What I can't believe is that they "volunteered" to give up this years bonuses.

BIG FUCKING DEAL.

What about the bonuses paid since 2004 when this shit was happening.

This is just another example of how fucked the "financial center" (UK) really is and a shining example of how corrupt they are.

 

Fri, 06/29/2012 - 15:59 | 2574421 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Derahrah!  King Rahrah!!  Rahrahrah!!!

Fri, 06/29/2012 - 15:59 | 2574424 midgetrannyporn
midgetrannyporn's picture

We can expect some EURUSD "fixings" then?

Fri, 06/29/2012 - 16:02 | 2574437 Hype Alert
Hype Alert's picture

Another day like today and we hit close to 1400

Fri, 06/29/2012 - 16:13 | 2574467 Jake88
Jake88's picture

another day like today and pigs will fly

Fri, 06/29/2012 - 16:02 | 2574438 No Euros please...
No Euros please we're British's picture

Allegedly Gordon Brown told the UK banks to manipulate LIBOR to keep the inter bank rate down. Otherwise quite a few more UK and US banks would have gone belly up. To this end, allegedly, the BOE made data freely available to Barclays to facilitate the manipulation.

 

Course, I don't believe a word of it.

Fri, 06/29/2012 - 16:03 | 2574440 falak pema
Fri, 06/29/2012 - 16:25 | 2574513 CrashisOptimistic
CrashisOptimistic's picture

That approves the ESM as it existed WITHOUT LAST NIGHT'S CHANGES.

Meaningless.

Fri, 06/29/2012 - 16:32 | 2574546 walküre
walküre's picture

I think it's worse.

It approves the ESM w/o those responsible voting on it even knowing what the changes are.

Sounds familiar?

Think: gun - congress - head - bailout - world - end

Absolutely disgusting.

Fri, 06/29/2012 - 16:57 | 2574665 falak pema
falak pema's picture

meaningless ? You don't read the shit that gets posted here!

If the Bundestag..., if the court...Merkel is saved, in fact she's planned it all for the german institutions to refuse what she gave in Brussels...very deeep machiavellian logic! Germany will never say yes it'll stay NEIN! NeiN! 

I love the desinvolture of after the event logic! 

Fri, 06/29/2012 - 16:09 | 2574459 Mark123
Mark123's picture

I must be retarded....I read the press release from the all night meeting, and I thought it said nothing.

 

About 40 years ago, the USA started on a process of moving manufacturing to the 3rd world to goose corporate profits.  At the same time, to keep people happy they loosened credit so people could mortgage their future.

 

Massive over-consumption combined with miraculous growth in Asia.  Now we are tapped out and all anyone can do is to pretend there is still some rationale behind governments borrowing far beyond their ability to repay EVER. 

 

I have seen many people do the same with their own lives, and they all end up ruined - right up until the last credit card is maxed out.  Funny....they appear just as prosperous up to the very last minute.

Fri, 06/29/2012 - 16:17 | 2574489 Jake88
Jake88's picture

not much volume. this was panic short covering and manipulation while everyone was scratching their heads. when reality sets in next week it will be a very different story.

Fri, 06/29/2012 - 16:22 | 2574502 razorthin
razorthin's picture

Volume hasn't mattered for more than 3 years.  What the manipulators (yes, I agree that it is manipulation) have managed to do is trigger bullish technical signals across the board (except volume, of course), such as bullish engulfs, oscillator crossovers gaps above support and moving averages.  And momentum indicators are not overbought.

Next week is the low volume, paint the tape routine.

Sat, 06/30/2012 - 00:29 | 2575417 The Monkey
The Monkey's picture

This market will give just enough back to lure in shorts and then SQUEEZE. And the shorts will come, and keep coming, until they give up completely. Then, after all the shorts have been thoroughly pummelled, and have long given up, it will be time to go short again.

Anyone thinking this market is going to tank before making another long slog sideways and up has another thing coming. This turd is going to fight the flush all the way.

Fri, 06/29/2012 - 16:12 | 2574464 razorthin
razorthin's picture

No kidding.  Yes, by fundamentals the SPX should be at 500.  But the technicals say this ramp has more legs.

Fri, 06/29/2012 - 16:23 | 2574507 CrashisOptimistic
CrashisOptimistic's picture

People make this mistake because they don't think it through.

"Technicals" are not magic.  They were always supposed to be a way to measure human behavior.

Why would you continue to use them when there are only computers trading?  There is no fear and greed.  There is only government intervention.

There is no market.  Stop trading.

Fri, 06/29/2012 - 16:15 | 2574477 Turin Turambar
Turin Turambar's picture

Great.  That's the last thing I wanted to hear.  The contrarian in me prefers that the scammers keep lying to us and tell us to BTFD.  Sheesh, I'm short over the weekend.  Now I KNOW I'm gonna get hosed on the low volume, short week next week.  ((

Sat, 06/30/2012 - 02:53 | 2575506 The Monkey
The Monkey's picture

A few rules I follow:

- Never short in front of the Fed.
- Never short in front of a summit.
- Don't open a short unless sentiment is broadly bullish (there are exceptions, such as a big and growing divergence in bond spreads vs equities)
- Revisit stops daily.
- When in doubt, close the position entirely.

Shorts are lowest risk when you enter the position following known events, a huge runup in prices and extreme bullish sentiment. This is typically the same time that shorting seems completely futile & newsflow makes an entry extremely uncomfortable ("S&P 2000, etc.").

Spreads should narrow in the periphery. We may get a pretty big goose following a big rate cut.

Fri, 06/29/2012 - 16:16 | 2574482 eclectic syncretist
eclectic syncretist's picture

We traded in the Dinner with Obama ads for Invest with Cramer??!!!  WTF??!!!

Fri, 06/29/2012 - 16:24 | 2574511 rumblefish
rumblefish's picture

todays rallly?? WTF?

Fri, 06/29/2012 - 16:30 | 2574533 Yen Cross
Yen Cross's picture

 Well one thing is for sure. The 4Th of July just got front run, by that face tearing WTI runup! I'm long "Webber BBQs" , s/t.

  That is what everyone will be doing next week , after fuel spikes next week!

Fri, 06/29/2012 - 16:34 | 2574554 mjk0259
mjk0259's picture

British bank disparaging financial management of Euro countries while UK has almost on economy other than financial engineering (and oil/gas). This is the same Barclays that was effectively bankrupted by one rogue trader, right>

Fri, 06/29/2012 - 16:48 | 2574617 Yen Cross
Yen Cross's picture

mjk0259  Lest we not forget all the   " LIBOR spread ramping" , southern back woods auction style...

Fri, 06/29/2012 - 17:04 | 2574691 Snakeeyes
Snakeeyes's picture

Yup, this was a big change ... but with no lasting effects. The EU adopted the US Federal Reserve in terms of direct bank lending and bypassing loans to sovereigns. And there will be centralized bank supervision. [Believe that when we see it].

All in all, it did nothhing to solve the probems caused by Socialism where has poisoned ALL of the EU. Simple banking changes do not neutralize the poisoned economic system.

http://confoundedinterest.wordpress.com/2012/06/29/angelas-angst-germany-surrenders-and-allows-direct-bailout-of-spanish-banks/

Fri, 06/29/2012 - 18:26 | 2574887 jonjon831983
jonjon831983's picture

Saw this just now on Bloomberg: "German Parliament’s Upper House Approves ESM And Fiscal Pact"

http://www.bloomberg.com/news/2012-06-29/german-parliament-s-upper-house-approves-esm-and-fiscal-pact.html

"Germany’s upper house of parliament, the Bundesrat, approved the future euro region financial backstop, the European Stability Mechanism, and the fiscal pact aimed at imposing budget discipline on European Union states. The vote today in Berlin came after the lower house of parliament, the Bundestag, approved the measures earlier today."

 

Not too sure what this will mean, but for ESM will it still need court approval?

Sat, 06/30/2012 - 00:13 | 2575387 FearedDevil
FearedDevil's picture

Fade this move?  LOL - not until 1380 breaks in ES. 

Love the contrarion opinions but one must remember... 

the door swings both ways 

at some point the illusion becomes reality.  By the way, you don't happen to know the way to Shell Beach do you?

Sat, 06/30/2012 - 02:33 | 2575498 Txo
Txo's picture

knee jerk rally

Sat, 06/30/2012 - 14:38 | 2577358 Grand Supercycle
Grand Supercycle's picture

More Equity Rally Expected.

Any traders predicting a multi month equity rally apart from me ?

As of today I am.

Last week was the turning point.

Significant equity upside expected this year according to my analysis.

However the SPX big picture remains very bearish and unfortunately this will not change.

http://www.zerohedge.com/news/2012-12-24/market-analysis

Sat, 06/30/2012 - 15:47 | 2577498 The Monkey
The Monkey's picture

I'm expecting a good rally, but I do not anticipate new highs for the S&P or Dow.

But, for a moment, let's consider what could happen without Europe waiting in the weeds.

- We could get an explosive credit fueled rally, laced with optimism feeding another consumer debt binge.

- Bears of all stripes would capitulate, yet the Fed would have a difficult time changing course - they have already comitted to low interest rates through 2014.

It's not impossible. There is no telling how far it would go if investors start buying peripheral bonds again.

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