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Commodities Up, Equities Unch, Credit Down
Following our earlier post, equities retreated and converged towards the reality of their credit cousins in the last 30 minutes to end only marginally higher (or practically unchanged by futures close). A 30pts rally off the overnight lows was far and beyond the performance of credit markets which never traded green all day but it was EUR weakness (USD strength) that was intriguing given the rally in PMs and commodities. Gold and Silver are very marginally lower on the week while Copper is up around 1% but it was Oil's outperformance on the day that was impressive as the gentle roar of printing presses was heard on both sides of the Atlantic (noting Brent in EUR trades at the top of its nine month channel). Implied correlation diverged (upwards) from VIX into the close suggesting macro overlays were more bid - which reflects also the bid for protection in CDS markets.
Crude made it almost back to $100 bbl today but still lags Copper on the week. Interestingly, PMs and commodities are all outperforming the USD movement this week as perhaps they are seen as better hedges for devaluation.
Following up on our earlier note, we did see notable convergence in stocks into the close but credit was also losing ground. One other signal of demand for protection was the VIX vs Implied correlation which taken together can gauge the demand for macro vs micro protection.
The fact that VIX fell but implied correlation did not indicates that potentially index overlays were more valuable than idiosyncratic trades today - given the up-close in implied correlation. This pattern often occurs right before a modest correction in equities and given the divergence between equity and credit (despite support from broad risk assets - CONTEXT), there appears room for deterioration in stocks from here (though realistically we'd prefer the equity-credit trade than outright one way or the other given the headline risk).
Charts:Bloomberg
UPDATE: By request, Brent priced in EUR:
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They're just trying to take it one day at a time... PPT that is.
I think Gerald Celente sums up the entire issue well.
Fixed Title:
Commodities Up, Equities Unch, Credit Down, RON PAUL Up!
That gobshite is just mad because he didn't have physical. It makes him a traitor and an idiot in my book.
He captures the fundamental issue. The Wanker Banksters are frig'n thieves.
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Stop Accepting Nonsense Ally Bank Commercial Remix (Project 12, 1112)
http://djia.tv/gerald-celente/stop-accepting-nonsense-ally-bank-commerci...
The news that got completely unnoticed:
Greek conservatives set themselves on a collision course with the European Commission on Tuesday, refusing its request to sign a pledge to meet the terms of a bailout designed to save the country from bankruptcy and safeguard the euro zone.
Whats that on your uniform! A PLEDGE PIN?
http://www.youtube.com/watch?v=WT1LXhgXPWs
The conservatives have stated several times on the record that they will meet the terms of the bailout. They refuse to sign the pledge because they consider it insulting, given their prior statements.
That is their official response.
Can you attach a number to the phrase "modest correction in equities"?
-.01%...or otherwise known as a red number. Anything further will be countersteered by the manna from BB.
So, if it is baked in the cake that ECB will have to start massive printing to keep the Euro alive, why are German bond yields so low? Is it because we all assume that the new printed money will only be used to buy bonds, so yields will be suppressed?
When and how will this end?
You can forget major increases in monetization, even the "sterilized" variety with their banks.
Germans would rather restructure than monetize.
The joke will be that if they print commodities will shoot to the moon and stocks will likely do just about nothing. The game has been broken
They'll go up, but not as hard as in qe2 and below inflation growth.
Bisschop takes King bitchez!!!!!
Just out of curiousity -
?anyone know if the oil released from the SPR was ever delivered?
?Did it ever make it anywhere or is it sitting in contango waiting for $150 oil?
?Was the oil auctioned at nearly the lowest price to see prices up now by 1/3 since the sale?
?If the oil was sold, has the oil been replaced to make whole the SPR???
?Curious if the flexibility for the administration to fuck w/ the market in the next oil spike has been dented?
Oil/gold/silver will jump like an electrocuted Godzilla if the ECB prints.
Oil/gold/silver will jump like an electrocuted Godzilla if the ECB prints.
$2,500.00 oz, easy.................
If they do not print,the games over for the EU.If they do, it's kick the can for a couple of years at best.(then they are US.)
(noting Brent in EUR trades at the top of its nine month channel). Implied correlation diverged (upwards)
***********
Maybe that statement will blow away the myth that oil can only be paid for in USD's?
Here is a nice Martin Armstrong interview from King World News:
Martin Armstrong - Gold Upside Take Off Only Months Away
"When asked about gold, Armstrong responded, “Basically what you are doing is you are building a sideways type of base. Eventually gold is going to take off to the upside, but largely when people begin to see the Emperor has no clothes and we’re getting close to that. I would only give it a few more months.”"
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/14_M...
And a podcast from Jim Rickards about his new book "Currency Wars":
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/11/12_Jim_...
and link to Rickard's interview summary:
Jim Rickards - The US Won’t Give Germany its Gold
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/11_J...
I am wondering how much of the resilient American consumer is due to increased sub-prime lending (i.e. a return our wicked old ways). We are currently getting bombarded with credit card offers again, plus it appears that the auto industry in particular is really pushing sub-prime to move their product.
Does the Fed provide any breakdown of increase in loans by prime, sub-prime etc? My argument is that you should add most of the increase in sub-prime lending as an expense for the banking system...to be eventually paid for by taxpayers no doubt.
What could go wrong?
Mark123,
(i.e. a return our wicked old ways).
Americans consumers are like smokers,near alkies, they can only go SO long, w/out a fix.
That time is now here.....................we will see a lot of spending, and charging this year.
So, just by looking at the headline............
Inflation
Low volume
Banks not lending
???
Unemployment, crashing productivity in europe, iodine clouds over europe, conflicts in the middle east that will soon pop up again....
Nothing to pay any attention to....
To bad the common people just don't seem to get it that they should get their asses out of the banks and into anything of value.
Any metal wil do, any commodity.
I get it. I am long physical anything. I guess that makes me uncommon.
That was supposed to be a joke, but when I read it back, it is sadly true. I'd say most of us hear are uncommon. he he, that could also be stated as, we are abnormal.
That settles it.
I'm borrowing rupees to trade for yen to buy gold to sell for TIPS to pay for the euros to short dollars.
US markets are losing the plot, the sell at the end made more sense
(crap Dell profits...). The point. Well the bear market trade appears to start in Asia prior to the European/US session. Basically USD buying went into overdrive before the markets opened here. So, watch next few hrs for commodities sell, USD bid and credit spreads in Asia widen. That is scary signal. Europe is a write-off, so no one cares , but the trend set now is Asia. It happened yesterday, it will happen when their markets open.
The volatility appears to be starting in Asia now.
China. Hmmm. Who's going to save the West now?
http://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html
but the Italian 10yr hitting 7% early befoere the end of the week...So that's Europe + Asia slowing any bull run on stocks for end yr.
There sure is a lot going on in Greece and Italy but how would you feel about making a trip to your local bank and trying to pull $8,000 cash from your business checking account, having sufficent funds, but the bank refusing to give you your cash? How much cash to banks really keep with them? This happened to me and my business last week. The bank told me I could not receive my own money, I had to put in an order just to receive that amount of my own money. This is very troubling here in the U.S.
Any thoughts from ZeroHedge readers?
First, if you have any daily cash reciepts, dont deposit them anymore. Second, withdraw a smaller amount. Do some today, some more tomorrow or the next day, until you are down to where you want to be.
Thanks for the tips. However, as a high-end retail business, we often need to withdrawl amounts under $10,000.00 without a moments notice. There are always sufficent funds in our account, that's never an issue. The real issue is the bank not having my businesses money when we need it most. Do the ZeroHedge readers think this is common practice in most American banks? Try to withdraw under $10,000.00 in cash, you may find the bank will send you home without your money that day. This troubles me. What do ZeroHedge readers think?
$10k is the cash limit before they have to track the withdrawal for money laundering (or drug dealing)... at least that Big Bro's excuse.
If its BofA, tell em to fuck off and liquidate your account. I did that last month and went to Everbank.... however, my biz rarely transacts in cash and I haven't tried to withdraw more than a few hundred. I'm sure they'll work with you to figure out how to make it happen.
Anyone see that strange GLD trade, meltdown and up? Crazy, look at your 15min charts....flashcrash
Everybody just buy the dip
Check the link....its classed as a depression!
The market is broken,,nothing makes sense.