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Cashin On Rumor Versus Reality

Tyler Durden's picture




 

The avuncular Art Cashin opines on the roller-coaster of unreality that has been the equity markets for the last few days as outcomes become increasingly binary and investors increasingly herded from one direction to another. His sage advice - as if spoken by the most-interesting-person-in-the-world - "Stay nimble", my friends.

Via Art Cash of UBS,

Rumors Versus Reality With Rumors Resurgent At The Wire

 

Yesterday, there were rumors about that Chinese authorities were working on a new stimulus package. That cheered Asian markets and allowed European bourses to tiptoe around a deteriorating situation in Spanish banks.

 

Even before the U.S. markets opened, the semi-official Xinhua news agency of China began pooh-poohing the rumors. The rumormongers would have none of the denials.

 

A package would be announced after the markets closed (presumably in Europe - circa 11:30).

 

That backdrop allowed U.S. stocks to open better in a rather sharp, sigh of relief, oversold rebound.

 

They even shrugged off some lousy consumer confidence numbers at 10:00. Since the confidence data sharply countered Friday’s University of Michigan numbers, traders deemed them likely inconclusive.

 

The rebound rally held into the European close.

 

The rumors apparently morphed again. Simon Hobbs on CNBC said his sources suggested some announcement might come after the European close. The sense seemed to be that it would emanate out of Europe - not China.

 

After the 11:30 European close, U.S. stocks began to fade and rather rapidly at that.

 

The Euro fell through a trapdoor.

 

Was it just disappointment at no announcement? It looked a little too sudden and sharp for that.

 

Attention shifted to the cut in Spain’s rating by Egan-Jones. The timing was certainly coincidental, but did the somewhat small agency have that much clout?

 

Also contemporaneous with the Euro drop were analyses of an odd switch in a weekly ECB report.

 

There was a decline of over 25 billion Euros in collateral posted on the most recent LTRO. In another part of the ledger there was an increase of over 34 billion Euros in “other claims” (frequently smoke for emergency loans).

 

That raised speculation that the ECB may have “called” a loan, as the value of the posted collateral deteriorated. The bank, perhaps, could not find valid replacement collateral and shifted to emergency loan status.

 

While that seemed rather technical, if true, it raised fears that the banking situation in Spain, and elsewhere could even be worse than we knew.

 

The Euro-led selloff petered out around 1:30 EDT after cutting the morning gains in half.

 

As the day wore on, the China stimulus story began to resurface. That led to a bit of a flurry in the final half hour. Also, helping were media reports that election polls in Greece were shifting toward Euro-safe sentiments.

 

Overnight - EU Proposal Starts Roller-Coaster Ride - Pre-dawn this morning the situation in the Spanish banking community took several sharp turns.

 

The FT had reported that the ECB had vetoed the Bank of Spain’s plan to recapitalize its banks, particularly Bankia.

 

The Euro fell to a two year low before the ECB tweeted that there was no veto. European markets stabilized.

 

Then, the other shoe dropped.

 

Around 7:00 EDT, the EU commission issued a surprise plan to channel aid directly into European banks rather than through the treasury of their sovereign.

 

The announcement caught the European markets off-guard and sharp spike rallies erupted, erasing all, or most, of the earlier selloffs.

 

Then the doubts began to pop up. Would this clear the Merkel wing? Could it be set up within existing treaties?

The doubts stopped the rallies and prices faded but failed to go into freefall. That’s why I keep stressing staying nimble.

 

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Wed, 05/30/2012 - 09:49 | 2475216 lolmao500
lolmao500's picture

Reality... something only pessimists see apparently... (or so they tell me).

Wed, 05/30/2012 - 09:55 | 2475247 Colombian Gringo
Colombian Gringo's picture

Vegas is more fun than playing these markets. At least you get to watch your money disappear, and if you lose enough, you get comped a hooker. With these markets, all you end up with is a hole in your pocket and a box of kleenex.

Wed, 05/30/2012 - 10:10 | 2475336 Azannoth
Azannoth's picture

When I think of all the hookers I could have had, for the money I lost in stocks... it make my eyes water

Wed, 05/30/2012 - 12:06 | 2475929 Darth..Putter
Darth..Putter's picture

Just think of all those STDs you could have now.

Wed, 05/30/2012 - 09:49 | 2475218 williambanzai7
williambanzai7's picture

The equity markets are no longer for raising long capital. They are a 24 hour video game epitomized by what happened to FB.

Wed, 05/30/2012 - 09:52 | 2475231 SHEEPFUKKER
SHEEPFUKKER's picture

At least Vegas is more fun. 

Wed, 05/30/2012 - 10:01 | 2475271 bdc63
bdc63's picture

more like Vegas ... maybe CNBC should start requiring all their female anchors and guests to where pasties ... expect for Maria ... and Abby Joseph Cohan ...

Wed, 05/30/2012 - 10:04 | 2475299 midgetrannyporn
midgetrannyporn's picture

the latter is a man baby!

Wed, 05/30/2012 - 10:20 | 2475398 azzhatter
azzhatter's picture

Maria's saggy tits in pasties is more than I could take.

Wed, 05/30/2012 - 10:41 | 2475512 tsx500
tsx500's picture

exactly.    i'd rather pleasure myself with a cheese grater than see Maria nekkid.

Wed, 05/30/2012 - 09:54 | 2475244 bigwavedave
bigwavedave's picture

Yo Bill, FB raised a lot of capital ;-)

Wed, 05/30/2012 - 10:14 | 2475363 williambanzai7
williambanzai7's picture

They sure did

Wed, 05/30/2012 - 09:59 | 2475264 Jay Gould Esq.
Jay Gould Esq.'s picture

WB7, a video game where the points are reckoned in euros...

 

Wed, 05/30/2012 - 10:08 | 2475322 GMadScientist
GMadScientist's picture

WoW-gold-backed currencies.

 

Wed, 05/30/2012 - 10:15 | 2475375 Peter Pan
Peter Pan's picture

I agree with your comment but excuse my ignorance in asking wht FB is.

Wed, 05/30/2012 - 10:26 | 2475426 Firing Pin
Firing Pin's picture

FB is Facebook, a.k.a. Faceplant, Faceberg, etc.

Wed, 05/30/2012 - 09:50 | 2475221 Firing Pin
Firing Pin's picture

I am so tired of this drawn-out continuation of what will be the eventual collapse of the global Ponzi scheme. Get it over with already! At least we might have one more major metals beat-down in the paper markets before the torrent of money printing begins. At least that is a silver lining!

Wed, 05/30/2012 - 09:51 | 2475222 Conman
Conman's picture

AAAANnnnddd now Syriza is back in the lead in the polls.

http://www.reuters.com/article/2012/05/30/markets-europe-stocks-idUSL5E8...

 

weeeee

 

only to be countered tomorrow with another poll showing hte opposite.

Wed, 05/30/2012 - 09:54 | 2475242 Seize Mars
Seize Mars's picture

The bribes are flowin'.

Wed, 05/30/2012 - 10:05 | 2475303 Conman
Wed, 05/30/2012 - 09:53 | 2475235 distopiandreamboy
distopiandreamboy's picture

Apophenia: the experience of seeing meaningful connections in random, meaningless data

Wed, 05/30/2012 - 09:53 | 2475237 francis_sawyer
francis_sawyer's picture

December 21, 2012 can't come fast enough...

Wed, 05/30/2012 - 09:53 | 2475238 Cognitive Dissonance
Cognitive Dissonance's picture

It has become so distorted that I honestly don't know if we would recognize 'reality' if we Facebooked planted into it at 90 MPH.

Wed, 05/30/2012 - 09:54 | 2475243 youngman
youngman's picture

Nimble....I think that is one reason people or should I say the New York Traders...hedgies...HFT´s... are buying Treasuries....they all think they can sell on the news and get back into the game fast and for a huge gain.....the problem is...they are lemmings...they will all sell treasuries on the "news" and the market will turn into chaos...they think T-bills are a bit better than cash...they are so "liquid" they say.....and a little interest to boot..I do not think they are anymore...at least not in a herd mentality way...when the "news" hits.....they all will be running for the exit.....but the door will be locked...

Wed, 05/30/2012 - 09:55 | 2475255 slackrabbit
slackrabbit's picture

I just heard Chuck Norris is going to take over from Ben.

 

 

True I have no proof, and  I did actually just make this up, but if enough of us say it....it will get on CNBC as they don't research anything.

 

Wed, 05/30/2012 - 10:05 | 2475309 duo
duo's picture

I drive by his house on the way to work...no CNBC truck there yet.

Wed, 05/30/2012 - 10:22 | 2475403 azzhatter
azzhatter's picture

David Faber will announce it and Cramer will declare it bullish

Wed, 05/30/2012 - 10:02 | 2475266 Clint Liquor
Clint Liquor's picture

Cashin's account of the day's trading reminds me of a dog chasing chickens.

Wed, 05/30/2012 - 10:06 | 2475304 virgilcaine
virgilcaine's picture

Art you seem like a decent fellow but it's time to pack it in buddy.. The Mkts are too corrupt to put into words each day. You had a nice long WS career but it's over my friend.

Wed, 05/30/2012 - 10:06 | 2475315 GMadScientist
GMadScientist's picture

"Stay nimble, my friends." - The Most Inebriated Man in the World

It appears I may have just urinated in my shoe.

Wed, 05/30/2012 - 10:10 | 2475335 Apostate2
Apostate2's picture

Every place you go,

Everyone's dancing mad!

Every place you go,

Everyone's got it bad!

There's a dance they do,

They call it Crazy Feet,

take a chance and you

Will find it hard to beat!

 

If you shake, and you're hot,

No mistake brother, you've surely got

Crazy Feet!

Wed, 05/30/2012 - 10:33 | 2475359 Mercury
Mercury's picture


He only accepts orders on paper tickets.
He once followed the herd just to see what it was like.
He's sold ice futures in Iceland and solar system default default swaps to the Germans.
He's played the trumpet while blood has flowed in the streets.
He's watched Shakespeare performed by muppets while dining on whale.

And when he puts on synthetic shorts he never gets taken to the cleaners.

I don’t always drink beer, but when I do I drink it in with a shot of whiskey inside.


Stay Frosty.

Wed, 05/30/2012 - 10:24 | 2475411 bigwavedave
bigwavedave's picture

Hey Art, 

Is this your Wall St? Go write your memoirs mate

---

integer i, n, sum

sum = 0

do 10 i = 1, n

sum = sum + i

write(*,*) 'i =', i

write(*,*) 'sum =', sum

10 continue

Wed, 05/30/2012 - 10:26 | 2475428 vegas
vegas's picture

How do you get your Mom to stand in front of the camera and do that all day?

 

http://vegasxau.blogspot.com

Wed, 05/30/2012 - 10:25 | 2475414 vegas
vegas's picture

He speaks Russian in Spanish.

 

http://vegasxau.blogspot.com

Wed, 05/30/2012 - 11:23 | 2475718 Uncle Remus
Uncle Remus's picture

Cubans. You're talking about Cubans.

Wed, 05/30/2012 - 10:26 | 2475432 Centurion9.41
Centurion9.41's picture

The reality of Mr. Market is he is a creation of people's projections of perception.  

Hence rumor and reality become one and the same, until clearly shown not to be.

Right & wrong is merely a measure of one's relationship to the tide's waves.

Wed, 05/30/2012 - 11:03 | 2475618 pissing_excellence
pissing_excellence's picture

Faber, Bass, this fellow, Grant, Rogers, Schiff, Celente and others got knowledge. It is not "time to buy a chebby"

Take care zh its maxwell house time.

http://youtu.be/AWMyKMp6Nes

Wed, 05/30/2012 - 11:38 | 2475789 Uncle Remus
Uncle Remus's picture

My money gets motion sickness when there's a lot of turbulence, so it's staying in the safe, huddled up next to the PM.

Wed, 05/30/2012 - 11:45 | 2475829 Sanksion
Sanksion's picture

Stock exchanges are like a ride in an amusement park. When you chose to go on you think it's real because that's how powerful our minds are. The ride goes up and down, it has trhills and chills, and it goes round and round, it is very brightly coloured and very loud, and it is fun, for a while. Some people have been on the ride for a long time, and they began to question : is this real, or is this just a ride ?

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