Beta Surge On Hail Mary Hope SNB Will Rescue Euro... For A Few Hours

Tyler Durden's picture

Presented with little comment as chatter about the EURCHF peg being adjusted spurred some stick-save buying in EUR as it approached the critical 1.3200 level, ES (and most of high beta risk) has spiked up as US equity's day session opened. ES is 18pts off pre-market lows - well ahead of broad risk assets though. Silver and Oil spiked considerably and Gold is shifting higher as the USD leaks off a little. Volume is not that low in ES for now but we would expect it to fade after this opening excitement as Financials are leading the way +1.3% - notably outperforming their credit spreads.

While correlations are still lower than average among the broad basket of risk assets, CONTEXT is pulling higher but with less exuberance than ES for now. 10Y and 2s10s30s are the main drivers of the strength for now followed by AUDJPY's relatively large shift.

In Europe, credit and equity rallied off the lows of early but did not converge considerably. Notably Main and XOver (investment grade and high yield credit) are now rolling back wider - suggesting risk-on is slowing for now - and financials underperformed considerably on the way up.

Chart: Bloomberg

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knight99's picture


GetZeeGold's picture





Just need a couple of minutes.......then I'm out baby!!!!!!



CPL's picture

Might want to get out right now at 10:29. 


The trade bots are starting to notice nobody cares anymore.  Can't find any suckers except each other to steal from.  Junior programmers and outsourcing, god bless predictable code.


And there is the the tilt...and over the rails it goes.

SheepDog-One's picture

Yea what good do the Hopium pops do when no one is falling for the BS anymore? I'd be FLOORED if I saw proof that 10 actual retail buyers bought into this am mini pump.

CPL's picture

It's actually worse.  With the bots trading the entire market is now prone to the same decay cycle as an uber leveraged ETF.


TPTB lose a nickle here and there, times the amount of stocks on the market, every nano-second trade.


It's been bleeding badly for around four months.  And like a leveraged ETF in a leveraged decay swing back.  The snow ball only travels down hill gathering size, momentum and weight.  The conservative estimate europe barfed out in it's conference earlier, by accident, was 30 trillion.


The actual number is close to 2 quadtrillion dollars.  To cease the steam roller you have to cover every derivative that has any link back to the investment and banking sector.  Not some.


All of them must be hedged.  At last glance world derivatives are 1.9 Quadrillion dollars worldwide.  That is how demented it's got.  The number is so high, doesn't matter what they do, infinity with compound interest is where it's going.  That's not capital either. 


That's pure debt.  What's owed.

The Fonz's picture

Some thoughts, just ideas.

Why couldn't they just support some of the derivatives? Take out two banks with largely opposing sided bets on derivatives, net them, support the difference with bail out funds. They need to unwind banks but can't deal with everything as you say.  Feed the remainder of the banks to the big boys.

 Why do bonds fate and banks fate have to be tied in an egalitarian fashion? Some banks will be destroyed and some bonds ruined in a fashion that will allow the amount of capitol govts do have access to to keep the disolution orderly. To me that sounds like you have to take out matching opposed bets to flush them. That couldn't possibly be done publicly I don't think. This choice of actions gets them a shot at compliance from the periphery, restores confidence by the show of failing banks, and poor debtors, in an orderly fashion. 

Further the debt doesn't have to be delt with, it only has to function until the next political cycle, and provide enough of a market move to allow the big boys to get in, out, and make money between in order to pump things for a time. That Quadrillion in debt is rolled over a very long time frame, only a very small portion of that amount is required to save the power that be long enough to leverage opposition leadership out of countries that are not "behaving"

CPL's picture

It should have done that but the government bailed them out.  The derivatives market doubled in size from that single action.  All those banks should have collapsed and taken their dirty laundry with them.


So marrying bad banks or debt doesn't take care of the problem.  Just pushes it in a corner into a tiny room overpopulated by bankers and their tools.  Someone eventually forgets themselves, grabs all that bad debt repackages it and it all blows up again.


This is less an issue with banking and money, it's closer to waste disposal but all garbage pickup has been suspended indefinitely.


As far as confidence goes...fuck'em; trust...confidence...understanding.  Those things are earned over time.  There is nothing in the snake pit to give any indication that trust should be placed with any of them.  This game is over, this is the death of the central bank and this is the outcome of relying on it.  This isn't new either.  Marx, Engels, Keynes...all point to this as when it ends.


What the original architects of the design of the central bank didn't count on was 7 billion people, under writing debt with more debt, then when that doesn't work formulate CDS/CDO/ETF/ETN packages to create a large ungainly derivatives market growing by trillions per day with a window rate of 1%.  The whole point of the central bank was to scale the economy with the population, we've been doing it backwards for 60 years.  Even then all models...even the Keynesian model doesn't account for the billionaires or finite energy.


In all situations the central bank is made to keep things "equal", a central bank is a communist mechanism, always has been, it is to insure capital growth is heavily regulated.  But that doesn't matter now.  The markets, all of them are so bad now when someone says they got a great deal on a trade, my instant reaction now is "no you didn't."


Five years ago...I would have listened.  Today, everyone is a pump and dump artist.  The fed, news letter thieves, banks, brokers, insurance companies, national publications...all of them are on the take.  Or I should actually say, stuck in a position they can't liquidate.  Ever.


Would you trust these fools to orchestrate a cat fight?  They can't even trim a budget.

The Fonz's picture

Thank you for your thoughtful reply! I read you often as your opinions are well reasoned, and well argued. Even in disagreeing I learn something of value! My thanks!

Also, no I would not trust these fools to orchestrate anything, that is why a "solution" relies upon a oligarchy gaining power and the overthrow of Greece and Italys govts is so noteworthy. A large group of idiots might not be able to call the tune, but a smaller group might be able to?

Confidence: yes I think confidence can be rewon for a time if a number of banks are destroyed.  I am always stunned at the gullibility of people to believe again and again. It's shocking honestly.

The point that central banks were made to orchistrate the economy with population growth is a concept I had not be introduced before! Thank you! I expect it to be useful!

If you are still willing, if you could explain or reference to a bit more of an explanation on Keynsians not dealing with billionairs? (understood finite energy)

Thank you again! :)


CPL's picture

RSI is as week as a newborn kitten after them blowing their load at open.


I often wonder how much money they throw down the market hole just to hedge inflation with their printing factories going 24/7...


Anycase...fuck'em.  Anyone that bought in there gets what they deserve, a big bag of nothing.

Popo's picture

Then again... if the Fed were to step in and move the needle,  today would be the day.   Traditionally the Friday after Thanksgiving is a low vol day,  so it's an easy day for the Fed to buy the market.

We're still going down to the gates of hell... but our central planners may well go for the low-hanging fruit and give us a ramp job in this easy/low volume setting...  

No worries for shorts.  Just borrow more shares and wait for Europe to shit the bed.



Quintus's picture

I think it is clear that the not-so invisible hand just stepped in there and 'Fixed' a situation that was getting out of hand.

Dollar down, stocks up on no news of any significance unless we are seriously to believe that tiny Switzerland is going to prop up the Euro when the German Goliath is unable to.

The fact that salvation only arrived shortly after the US markets opened gives us a clue as to where the owner of the not-very-invisible hand resides.

CPL's picture

German Goliath? are going to pull out that old yarn of nonsense?


There are third world countries with better balance sheets.

Quintus's picture

Third world countries with better balance sheets?  Name one.  Bet you can't.

My point is that by comparison with Switzerland, Germany is a Goliath.  

A wider argument about the relative strength of balance sheets is an exercise in futility if we accept the reality that all developed countries are insolvent and cannot possibly meet their obligations (on and off balance sheet) without the sort of growth levels that would require the discovery of a new infinite energy source together with a means of creating essential commodities out of thin air.


holdbuysell's picture

Gotta love focusing on those fundamentals.


CPL's picture

By fundamentals you mean unending bullshit with a sprinkling of "happy happy!" and a dash of crazy.

transaccountin's picture

i love the smell of hopium in the morning

slaughterer's picture

If S&P cracks 1173 this rally will continue up to 1180 at least.   1173 makes me a believer this is more than this CHF peg chatter.  Big wheels are turning behind the scenes.  Maybe we learn what it really is over the weekend.  

BlueStreet's picture

Must have drank too much eggnog yesterday, having trouble finding the 'press the shorts' button.  Oh, there it is.



qussl3's picture

Logic says this is BS.

But all short squeezes are started on BS like this.

Wont be surprised if we run up to 1.38ish from here till the EOY.

Can they keep the "No crash Dec" tradition alive?

dpr10's picture

1.38???how did you come up with that..I guess that is where you bought long-tern right::))

qussl3's picture

Looks range bound to me, if i had to have a position i'd be long the EUR here.

Wouldnt touch anything EUR related now with a ten foot pole tho.

Thing moves like a ping pong, unless you believe you can outrun the brokers i wouldnt play.

Too thin, positioning likely VERY lopsided.


GMadScientist's picture

The ping-pong takes on a different hue when you're long EUO from the mid-16s though.

Manipulated? Yes. Permanently? LOL The word for today is: inevitability.

qussl3's picture

LT, absolutely the fundamentals win.

But the leverage most idiots are sold on in FX  and the get rich quick mentality will get retail killed in the ST.

The volatility in the ST is accelerating, the rebounds and pull backs are going to be even more mental going forward.

ceilidh_trail's picture

I agree. Just covered all my equity shorts. My brain says where this is all headed, but, short/medium term it's tough to fight the fed. This is a complete bs rally. But, I want to enjoy my weekend with my family... 

GMadScientist's picture

Time to put the tray tables in upright and locked position, no doubt, but parachutes bring more peace of mind than seatbelts.

orca's picture

What SNB does is buying USD and swapping EUR to the FED.
The only entity not terrified of the EUR is the FED, since they know they can outprint anyone anytime anyplace.

swissaustrian's picture

Yep. It´s so obvious. SNB is buying USDs without a doubt. The Swiss stock market loves it. The real estate market is booming due to ZIRP4EVA... and in a few years we´ll have massive price inflation followed by a collapse of the real estate bubble. Just like what we had in the early 1980s after we had to pay for the late 1970s when the SNB pegged the CHF to the DM. 

Rainman's picture

OT....Weil wonders if the Squid is the next MFG with the same ponzi auditors reviewing their books

SwingForce's picture

PPT's got those vacuum tubes repaired I see....

There ya go, erased Friday's last 5 minutes, and a gap jump as a salute.

YesWeKahn's picture

Someone must have a predefined list of rumors. They send one out everytime there is a market weakness.

Zgangsta's picture

None of this concerns me, because I have a diversified portfolio. I own gold and silver!

slaughterer's picture


Swiss keeping it mum for now, unlike their US account numbers: "SNB declines to comment on recent CHF weakness and speculation on plans to make an announcement"  Well played, should force some EUR covering.    Squid EUR/USD shorts should be taken out .  (Don't pretend you do not think they went short at 1.34). 


papaswamp's picture

Got to have the rally early....the key will be the last 30 minutes of the market day....will traders want to go into the weekend exposed?

qussl3's picture

The relevant questions are whether they are net long or short and how much?

Specs are likely to be short not long.

No Mas's picture

SNB, blah blah blah.  Credit spreads blah, blah blah.  EURCHF blah blah blah.

Just BTFD.  TPTB are TPTB for a reason, mainly they have the POWER!

The power to keep markets, currencies or whatever else where they want them to be.  Otherwise, they would not be TPTB!

So relax and BTFD.

SheepDog-One's picture

Why do you always want other people to buy? You sellin?

Mike2756's picture

BOJ might prove otherwise.

GMadScientist's picture

In your case, BTFD means bend to face downward.


dcb's picture

Ok if you use b9ollenger bands like I do you realize the last close on weds was well outside of the 95% two week confidence level. so you know it almost always has to move in before moving down. I try to use as a potential trading top two closes out side of this (on an upswing) it doesn't work as well going down, because the down move is so much faster. if today has a very small trading range, be careful. ( could be a trun up, and we are overseold and going into holiday season. plus 10 year near record lows. I don't know what's going to happen but alos in general I close shorts or lessen then down 4-5 days, then re buy lower

GMadScientist's picture

You sound like someone discussing the finer points of surfing tsunami; your analytical tools are blunt in a manipulated market on those timescales.

slaughterer's picture

Getting close to my BUY stops.  Again, today's opening and this rumor is very well-played technically.  

SheepDog-One's picture

Good zero volume morning for a little pump n dump action. Big deal.

YHC-FTSE's picture

I'm sorry, "Risk on is slowing"? When was it ever "on" in the last few months? 


Not interested in ES, but the only asset class I'm interested in, gold, is running +ve beta as expected, and I expect it to move to -ve beta if the EU risk and associated financials in the US keep on take a hammering. A +1.3% shift at opening does not mean very much, imo, after a 24 hr break from tanking. Unless you know something I don't, the risk fundamentals have not changed in financials. 

Cult_of_Reason's picture

Bernanke ordered NY Fed to prop up the stock market today to elevate consumer sentiment so she spends more at the mall.

SwingForce's picture

The only stocks The FED is buying are BANKS.

slaughterer's picture

This is not a low-volume play: there were some BOS in the first ten minutes.  

SheepDog-One's picture

GEE theyve popped indexes up about .5%or so wow what a rally! Smokin!

GOSPLAN HERO's picture

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