Broken Market Update

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

Well, stock futures have already had a decently volatile session.  From a low of 1112 all the way back to 1142, with a couple of 10 point moves in between.  Broken.  I think credit markets are telling you that this is a great second chance to short stocks if you didn't last time.  MAIN is basically unchanged.  SOVX is 4 wider, back to 292.  More concerning, since the crisis has been infiltrating the banks is that SocGen is 15 wider at 320, and BAC is 5 wider even while their stocks are trading up.  Those all seem like pretty solid warning signs that stocks so far are ignoring.

The mortgage insurers, PMI in particular are in deep trouble.  PMI is trading at 70 points up front (+5 on the day), making Greece look like a safe haven. I have heard PMI bonds are now trading "flat" so investors aren't willing to pay for accrued.  Psychologically if nothing else, a default on this name will not do anything to help the housing market.

While some people are debating the merits and likelihood of Eurobonds, others are more concerned that the existing promised bailouts will fully materialize as each country is starting to act in their own best interests - Finland and collateral as a prime example.  I think it is far more likely that the existing plans fail to materialize or help than that we get a Eurobond issue anytime soon.

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Stoploss's picture

Don't take your eye off the ball, (Socgen). She's a little rickety. All it will take is the smell of a run, anywhere, and over the cliff she goes.

CPL's picture

yup, wait for the entry for the short.  There's no racing to the bottom, just free falling.

Ratscam's picture

in mid fall the baby of sarkozy will be bailed out

rocker's picture

On Aug 8 the S&P futures when under 1100 in the futures market.  

Most technicians will call this a confirmed BEAR market now.

Herbert_guthrie's picture

CPL - Do you have internet access in the nuke bunker?

Based on your previous warning, I sold everything and moved to a chunk of ice off the coast of Antarctica. You didn't lead me astray, did you?

CPL's picture

Why would you move somewhere that you have no clue how to live and you are completely dependent on external resources to survive.  Anycase...hope you sold and are in a position that won't get you drafted or won't let you starve.  Although my understanding there won't be much differenciation between the two.

...Never undertood that concept of a nuke bunker, if a modern nuke hit somewhere like NYC, even here in Canada the options would be starve or die of radiation poisoning once you eventually left the bunker and ran out of resources.  I'm afraid most of the scenarios from the 50's are incredibly rosy.  If eight nukes were dropped on the US, 90% of Canada would be dead the same day along with the US.  Somewhere like England and the Isles, just need to drop a nuke off the coast and let the wind poison everything.

Stay safe. 

Are you kidding's picture

Bullshit...more than 500 air burst detonations have happened...MANY right here in the good 'ol USA.  We didn't ALL die.

CPL's picture

To answer the air tests.

Airburst was done only once.  All the rest are payloads dropped from the air.  Want to guess why there was only one airburst?

Herbert_guthrie's picture

Thanks my man.

It is a testimony to your credibility that many of us remember your paranoid rants a few weeks ago and challenged you on it.......

A weak poster would not have gotten any response.

By the way, my paranoid rants happen once per quarter.....

antidisestablishmentarianismishness's picture

Thanks but i'm going with the "rubber band is stretched" thesis.

DeadFred's picture

Long term, you know like this week, we haven't retested the Aug 8 lows, and they're selling a lot of bonds this week. It takes a lot of gnashing of teeth to sell 200 billion in AA bonds at negative real rates.

SheepDog-One's picture

So even though Merkel and Sarkozy have said no Eurobonds, the financial media is insisting there will be?

HelluvaEngineer's picture

No, Merkel opened her pie hole this weekend and said "for now".  This has been interpreted by the short bus crowd as their queue to bid up the Euro and buy LULU and CMG.

spiral_eyes's picture

the german people won't let merkel bend them over and fuck them with eurobonds/efsf/budgetary union. fuck no. why the fuck should they pay for spain, greece and italy to work 10 hour weeks, retire at 45 and get free govt hookers? fuck no.

rocker's picture

That's Funny,  Merkel's Pie Hole.

Oh regional Indian's picture

Asymmetric markets, female dogs!

And we should call Eurobonds Eurobunds and be done with this fake name paradigm, eh?

Or Le Eurobunds, which pretty much covers it. 

Vivek (ORI)

TzaristBondHolder's picture

Europe reversed from being -0.5% on open to 2.5% as we speak.  Are they happy that the Libyan 144tons of Gold will finaly assist the bailout?

SheepDog-One's picture

But most of that gold goes to Chavez who tells the ECB 'Put it on a boat to me now'.

Sudden Debt's picture

The market is so depressed that any news that isn't even more depressing is good news.


SheepDog-One's picture

Market like a manic depressive teenage girl, one minute sobbing helplessly in the corner, the next running around the room throwing glitter confetti in joy!

DeadFred's picture

From a neuroscience perspective happiness is a purely relative phenomenon. The teenager in Beverly Hills who only got a Beemer for her 16th birthday, not the Ferrari her friend got, is bummed. The Afghan farmer who hasn't had a single bomb fall on his fields for a full month feels on top of the world. I wonder if the robots feel the same way.

splixx's picture

What is PMI referring to?

ViewfromUndertheBridge's picture

from the context... mortgage insurer

and this sounds like news, Aug 19 they are outtabusiness, well new business so far...

ZeroPower's picture

SovX WE still wider than SovX CEEMEA - you know, the latter being deemed the more risky out of the bunch..and yet, CDS indicates otherwise.

Thank you, periphery PIIGS.

speconomist's picture

Need help today too, PMI?

Thanks in advance. I have been searching in Yahoo! Finance for "PMI CDS" and other combinations, but couldn't find the answer, do you know any place where I could search for it next time? Thanks as always.


Edit: Ok, seems that I didn't read much the post, I guess it's some kind of Mortgage Insurers CDS.

ZeroPower's picture

The PMI group

Not a very liquid CDS in any case... and the 70 pts upfront means how much you pay to the CDS seller. The value of this upfront is the PV of the premium discounted at the risky rate

Boilermaker's picture

Broken unless you know, ahead of time, which way they are going to gap the open.  Then, I would suggest it's anything but broken.  It probably pays handsomely to be an insider in this game.

MoneyWise's picture

Short Market? right.. Go against the flow, short GOLD and buy Market. How about that? Total EUR Zone Debt to GDP is lower than USA debt to GDP in total, so, set your records straight.

Central Bankster's picture

You can always tell which traders are fairly new to the game.  They always think they can call the terminal tops in uptrends and bottoms in downtrends.  Good luck shorting gold and going long "2 PE stocks" there buddy!

LawsofPhysics's picture


I am seeing a lot of "smart money" traders and "technical" traders penning articles that all the insiders are buying like crazy.  Seems like bullshit to me, your thoughts,please?  It seems to me that the bump from QE3 can't be that big with the state of all fiat and the situation in Europe.

MoneyWise's picture

Yeah, they'll tell ya it's fake, buy canned
BBQ beans, hide under the rock and wait for
Collapse of the World Fin. system, Revolution, Ron Paul and Gold standard..
Those guys are full of it.. :)))

SheepDog-One's picture

Well MoneyWise if you think its all good, place ya bets long then! 

MoneyWise's picture

I do, I have few stocks with PE near 2,
Even double deep will not take them much
lower. Ohh. And by the way Check Dividend
Calendar, look how many companies are paying
large dividends
nowadays, + some juicy Special dividends,
Did anyone see that in any recession..???
I tell you 1 more time, this Recession talk
is complete BS. Perhaps time of the slower growth
in US and faster growth in China and elsewhere in Asia, After all those guys have huge upside potential in terms of Consumer spending, long way to
Mean while
High frequency m*f*ckers responsible for those 400+
DOW swings, FTC should reinstate Uptick Rule, plain
and simple.

Buy the F deep, or watch how others will scalp
20+% off this market by the year end.

SheepDog-One's picture

WOW thats really great! 2 P/E stocks, I bet theyre going places.

SwingForce's picture

Make ALL selling subject to upticks ha ha. Yes lots of REAL CASH MONEY getting spit out this week, you don't get that from holding a Treasury anymore.

Smiddywesson's picture

Did anyone see that in any recession..???

You might want to read some history before spewing out a bunch of crazy opinions and recycled baloney from CNBC.  Maybe companies are paying out huge dividends because they can't otherwise attract investors.  If you consider yourself well informed and intelligent, then stick by your opinions and double down, I dare you.

This economy is going nowhere, but you are going to the poorhouse. 

DeadFred's picture

He doesn't have any more money after the last month.

LawsofPhysics's picture

Every good choice, like a good trade, should be properly hedged.  Ride the equity wave while converting profits hedged against physical assets and re-investment (buying low) of all kinds my friend.  For me, those assets can vary considerably, but most are related to keeping the business going.

At the end of the day, more and more people are remembering what real value is.  Bad news for paper-pushing fucknuts.

Oh regional Indian's picture

Lws, remember through most of last year and this, insiders were selling furiously? All time recored selling. Covered extensively here. Well, at these fallen levels, they are probably buying on command and  they still made a big buck. 

I assume this was the plan all along. Insiders Sell high, buy low. Nice when you are instructed thusly, eh?

Vivek (ORI)

LawsofPhysics's picture

Do worry ORI, things get more and more interesting as fewer and fewer are now being "instructed"

I still see a major war as the only way out, simply no other way unless you accept that there will be world wage, and living standards parity.  The good news is you can play with the paper from anywhere in the world now (as you know) so why not do it from your beach or mountain villa?  Cheers.

SheepDog-One's picture

AH yes let the pensioners have the hard to sell IE worthless assets....probably taste better than the cat food theyre presently eating.

Smiddywesson's picture

I'm sure that increased morale around the office.  Imagine working for one of these jackels?

cliffordg's picture

Funny how the regulators try, but it's like squeezing a bulloon with 2 feather's.

Johnny Lawrence's picture

Tyler, feel free to expose the fraud that is retail brokerage research...


This is in my email box this morning -- from UBS Retail Research:

Mike Ryan (bio), Stephen Freedman (bio), and Jeremy Zirin (bio)

We are recommending a reduction in equity exposure from an overweight to a neutral tactical stance in portfolios consisting of stocks bonds and cash. We do not take such a move lightly following the significant correction equities have already undergone. But to maintain an overweight position at this juncture would require that investors buy into the market amid the selloff and increase equity weightings from current levels. We believe that the risk of further financial stress in the Eurozone over the next three months, coupled with a higher risk of recession in developed economies including the US makes the risk / reward trade off appear much more neutral for equities.

This was in my email box on August 8th (also from UBS Retail Research):

Mike Ryan, Jeremy Zirin, Stephen Freedman

UBS First Take: Sit Tight 8.8.11

Stocks continued their rapid decline on Monday, driven by increased concerns over the European sovereign debt crisis and the risk of a negative feedback loop between financial markets and the US economy. Recent economic data releases and forward-looking corporate earnings revisions continue to point to a slower, but non-recessionary environment in the second half of the year. Equity valuations – especially relative to bonds – appear very compelling. While valuation alone is rarely a catalyst to stem rapid market declines, investors with a 6-12 month time horizon will be rewarded, in our view. Therefore, while further equity market downside can certainly not be excluded given the broad-based selling that is going on, we recommend that investors with equity exposure sit tight at this advanced stage of the sell-off.

These people should be charged with fraud.

SheepDog-One's picture

They should change their name from UBS to We Be Full of BS.