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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Comay Mierda's picture

LIE-bor kings say fade?


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.

Randall Cabot's picture

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

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..!

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!

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.

Cdad's picture

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

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.

Umh's picture

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

falak pema's picture

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

GeneMarchbanks's picture

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

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.

resurger's picture

I will say it one last time :

Short The Fucking Top

before it's too late

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.

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.

resurger's picture

lol why are you mad ?!

You have to do what you have to do

Splootch's picture

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

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.

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.

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.

NotApplicable's picture

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

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.

Mark123's picture

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

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?

slaughterer's picture

The Fade call = consensus.

Be a contrarian, be a bull.  

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.

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.

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.

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

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.



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!!!!!

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.

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


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'.

spentCartridge's picture

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

Dr. Engali's picture

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

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.


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.......

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.


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.


Mr Lennon Hendrix's picture

Derahrah!  King Rahrah!!  Rahrahrah!!!

midgetrannyporn's picture

We can expect some EURUSD "fixings" then?

Hype Alert's picture

Another day like today and we hit close to 1400

Jake88's picture

another day like today and pigs will fly

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.

CrashisOptimistic's picture

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


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.

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! 

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.

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.