Coordinated Rumor Ramps Risk

Tyler Durden's picture

Epic. Stocks clambered back up to the 1315 (S&P 500 e-mini Sept 2012 contract) level which has been a critical VWAP level for a few days now amid what was a mildly slow day (though IG credit outperformed from its recent deterioration). Then the rumors started.  Risk assets jolted in a very systemic manner (all highly correlated) as ES popped above last Friday's highs (unable to get close to Monday's open we do note), then as the realization that a pre-emptive warning of 'some' action in the case of 'some' event was simply the status quo anyway and we gave the entire 14 pt ramp back. Then we bounced once again as BoE made some noise on further stimulus if things go pear-shaped and we bounced again (though this time only about 8pts and on very small average trade size we note) as we headed into the close right around last Friday's highs. With OPEX tomorrow, this vol could not be more stop-inducing and painful for many as the Dow has now been -150, +150, -80, and +160 pts this week and decent volume today although average trade size remains limited (on the lack of conviction we pre-suppose). Gold and less so Silver bounced off their earlier spike-down moves and WTI rallied like a champ today (resyncing with Silver just in the green for the week). Gold is up 2% on the week (but was far less impressed with the chatter today than stocks were) as in the meantime the USD dropped and ended -0.75% on the week (and AUD is now 1% stronger). Treasuries whipsawed around but only retraced around a third of their rally from yesterday's morning session as 7Y and 10Y underperformed (+5bps or so). Pre-OPEX VIX is always a mess but we dropped over 2.5 vols into the close to end under 22% (but above Friday's close). Risk assets in general moved together and stayed in sync today during the final hour's carnival with stocks perhaps a little rich by the close.

Quite a week in ES but today's final ramp - dominated by low average trade size (the yellow bars - h/t @eminiwatch) - makes us less certain of any follow through...

Between VWAP levels, Friday's close, and low and high volume nodes (at left in the distribution), this week's action has been very mechanical (with a retest of the Monday 1337.5 levels not out of the quyestion on an auction higher though we suspect a push back down to around 1313 is more likely in the very short-term. (though judging from the market reaction to EUR100bn last weekend, this weekend could be even uglier one way or the other)...

but it seems all the covering is occurring here into the weekend as cheap IG protection was sold back to sync with HY and stocks...

Financials were the most volatile post-rumor as is clear from this chart (though they ended up holding onto gains into the close)...

Oil outperformed dramatically - moving back into the green for the week - while Gold was considerably more stable than Silver (as both bounced off their spike lows from earlier in the day)...

Treasuries have been just as wild a ride as stocks this week. Tuesday 30Y yields retraced 50% of the Monday open to close rally and Today retraced around 38.2% of the Wednesday open to close rally. It would appear the risk-on bounces are losing their strength...

The drop in VXX and exuberance in HYG was enough to juice SPY all day long (as per the upper left chart) but risk-assets broadly were in sync with stocks all day - even as we popped-dropped-and-popped (upper and middle right). Equity correlation with risk assets rose in the afternoon (lower right) and VIX fell back to its 'fair' level based on the moves in credit and equity markets by the close...

All in all feels like some covering/squaring and some squeezing/stopping on the rumors into a tough OPEX and even tougher weekend...


Charts: Bloomberg and Capital Context

Bonus Chart: Today was the second best day for Facebook since its IPO (+3.74% vs +5% on 5/31) on the 2nd lowest volume day it has had. If there was any question as to what the new QE-momo stock is - we have found it as FB rallied well over 2% on heavy algo-driven volume as soon as the rumors hit...pathetic!!

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MiguelitoRaton's picture

Pretty girl, economic insight, better way to spend 90 seconds.

Ahmeexnal's picture

epic failure

seems like NL has already jettisoned the euro

Transitory Disinflation's picture

Dump the South and create the NEURO.

TruthInSunshine's picture




EuroZone Version of Wimpy J. Wellington:     We will gladly pay you next Tuesday (or actually, never) for some slouvaki, ouzo and the right to retire at age 48 with a denominated, 120% of last annual salary pension & lifetime 'everything' benefits today. Paul Krugman has made interchange arrangements with the BIS, and The Money Masters have pledged financing in exchange for secured lien status in your infrastructure and the right to own your citizenry.


Germany & Northern Europe Taxpayers/Pensioners/Yet-to-be-born:     Hell to the no. No more free slouvaki or ouzo on our tabs. And no more pension/government bloat/public sector graft at our expense. And that goes for Spanish tapas, Portuguese bacalhau, Italian sopressata or French Château Barreyres, equally, bitchez.

ronaldawg's picture

MiguelitoRaton said:

"Pretty girl, economic insight, better way to spend 90 seconds."

I'd hit that! NOT! - I don't think her understanding of debt is all that great either.....   We'll have a war with China before long and seize all their assets in the U.S.  Have fun with all that worthless paper you have China.

MiguelitoRaton's picture

1. China could very well be pledging their "good as cash" bonds as sole collateral/recourse to buy assets like gold forecloses on the bonds...worthless paper, kills the bank, China keeps the gold mine. Probably using western banks, check-and-mate.

2. China is building up their military and leapfrogging some of our tech (straight to drones and ship killers) for next-gen capabilities.

3. The video is right on about debt = slavery. we aren't physically sending our people to China like the slave traders, but the debt will be paid or it will come back to screw us on a default, one way or the other our future will be bleaker because of it!

TruthInSunshine's picture

Oh look, the British elite, with an economy reeling and a stack of national debt piled high to the moon, are concerned enough about the banks that they're preparing to leverage even more of their citizenry's future on dishing out more free dolla' dolla' sterling pounds, yo, to the banks (shocker; it's the London/New York plan - starve the people and businesses that make things of value, and subsidize banking/financial firms that engineer fiat black holes):


British Plan Offers More Funds to Banks
AUD's picture

And I fully expect to see the dynamic European parliament duo, Farage & Hannan, excoriating the Bank of England for bailing out UK banks & that the UNITED Kingdom is a failure, since you can't solve a debt crisis with more debt now can you?

Yes, 100% certain we'll soon hear from Farage & Hannan on this subject.

Marginal Call's picture

Bitch was pretty dumb.  This ain't about debt or taxes, but positioning for a post crash world.   Nobody is getting paid. 

otto skorzeny's picture

pretty girl-90 seconds? that sounds about right

walküre's picture

I'd fight 'til my last breath before the Chinese slave traders would take girls like her back to their girl-less excuse for a country.

jezzarayman's picture

wish Goldman would come out with a weekend trade recommendation already.....................cough....cough

bdc63's picture

The rumor that I'm hearing is that the Euro has already collapsed ... just not announced to the sheeple yet. 

Certainly might explain all of the sudden "excitement" among the Central Banks this afternoon ...

read this (posted a few hours ago):

Muppet Pimp's picture

LOL!  Beware phenylketonurics (sp?) this link could induce seizure....

CommunityStandard's picture

Seriously.  Does he want anyone to actually read it?

Manthong's picture

Gee, sounds like it could be pretty serious..

ekm's picture

Stupid idiots. They must all be on cocaine.


Primary Dealers never had a liquidity problem, they are not craving for liquidity.



No more SUCKA. They are retiring and need medical care. No more stock market gambling.

CommunityStandard's picture

Lack of suckers = liquidity problem.

ekm's picture

Oh really?

They have already bought up most of S&P.

Can you tell me what's left to buy?

Yen Cross's picture

 Welcome back ekm . Noticed the loonie has been bouncing off of support just below 1.02.

  I'm looking forward to a grand weekend!


ekm's picture


I never left.

My forecast is WTI at $50 and CAD at 65c within the year.

No QE until S&P 1100 if not lower.

nobusiness's picture

This just in, Bernacke and plunge Protection Team to guarantee 10% stock market gains until at least 2014.  PPT stands ready to step in whenever S&P 500 falls more than 1% or whenever individual investors by put protection.  Action will take the form of outlandish market rumors disseminated to CNBC's Bob Pizzani and reported as fact.

dwdollar's picture

Wow, things seem so much better from this morning don't they? That +160 on the DOW is TOTALLY justified. I can't believe how much the outlook improved today. INCREDIBLE.

you enjoy myself's picture

this is starting to look like a death wobble again.  increasing, uncontrollable amplitude in both directions until the thing just breaks.  but Ben said its a good idea for retirees to gamble on equities, and he knows what he's doing.

El Oregonian's picture

hahaha... Screw you Blythe. I'm ordering and taking ALL IN PHYSICAL! HAHAHAHA!!!

HD's picture

Central bankers, TBTF banks and politicians caused the 2008 crisis. Yet the market trusts the very same to fix everything.  I just wanted a return to accurate price discovery - now I have to agree with many here that only a collapse is going to right this ship.

Blackfox's picture

The Bank of England will launch two new stimulus packages in response to the worsening economic outlook, the BBC understands.

PalladiumJockey's picture

And then England said "about that time eh old chap?"

walküre's picture

Together with the government, it will provide billions of pounds of cheap credit to banks to lend to companies.

It will also offer banks access to short-term money to deal with "exceptional market stresses".


Translation. The BOE is printing more of the same and devaluating currency. Bullish for gold and silver, nothing else.

Neither production nor consumption will catch a lift from this bullshit. GDP still negative.

Hey, but at least they're trying.

E for Effort and soon F for Fail again.

walküre's picture

wow, not only one but TWO stimulus packages

the DOUBLE whammy

read between the lines though .. they're offering lower interest rates

why? is it hard to get cheap loans. not really. is anyone in need of a loan? not really.

so why? because the banks are bleeding red ink when nobody is taking loans.

a loan is still a loan. you are obligated to pay it back eventually.

economy is in the toilet and new or cheaper loans won't help, only debt SLASHING will help

MsCreant's picture


"TWO stimulus packages the DOUBLE whammy"

Double insertion, twice the screwing = gang rape


slewie the pi-rat's picture

maybe a swing to hang from the ceiling? 

it could be raised and lowered

the swing;  not the ceiling

otto skorzeny's picture

GDamned NG ripped higher today. UNG was up 15%

CommunityStandard's picture

NG is one of the few things I'm comfortable being long in.... aside from fiz of course.

JustObserving's picture

This is hardly a market.  Everything is manipulated to suit the central banks - stocks, bonds, commodities.  Where is a market in any of these?  Silver should have skyrocketed today but ended with a loss.

Something is rotten in Denmark - probably, everything.

junkyardjack's picture

Silver and Gold are crowded trades.  All the bugs are already in there.  Didn't you see the article from GoldCore on Tony Robbins being bullish on gold. That doesn't seem like a bubble to you?

JustObserving's picture

US debt and unfunded liabilities increasing by $22.5 billion a day is the real bubble to me.  That is enough to buy 70% of the silver bullion in the world.

No wonder the Fed has always been an enemy of real money, i.e., gold and silver.  Volcker was honest enough to admit it.  But Bennie is lot more comfortable with evading the truth.

What percent of US dollars circulating in the world are counterfeit?  And the dollar will collapse sooner or later.  Why are Europeans not buying lot more gold and silver?  They have been dissuaded by constant attacks on these metals and you saw such an example today morning.

No, silver and gold are nowhere near a bubble with all gold and silver bullion in the world worth less than $5 trillion.  US debts and unfunded liabilities will increase by $8.21 trillion this year alone.

junkyardjack's picture

People will always need a house to live in, prices can't go down....

lotsoffun's picture

i get the sarcasm. 

salomon brothers yield book from the 80's.  the very first sentence  'the value of a dollar today is always more than the value of a dollar tomorrow'.  pretty scary if the bible is proved wrong.


MsCreant's picture

"What percent of US dollars circulating in the world are counterfeit?"

Okay, we have entered some kind of event horion. Is it counterfeit or counterfiat? Is counterfeit a simulacrum which hides the truth of the fiat? BOTH ARE A FUCKING LIE. Neither one represents a truth. In fact, the so called counterfeit is more honest than the fiat. The real question is who believes the lie (or goes along with it for the sake of Machiavellian mechinations) for how long? 

lotsoffun's picture

infact, in a lot of ways, they are really saying it's ok to print dollars for yourself, because all they want is the most amount of dollars possible in circulation.

but maybe i should preface that like the stupid adverts shown in the US 'this is a simulation by experts - do not try this yourself'.  or something like that.  i rarely watch tv.

or - in a similar vein - i once read a clever analysis of 'who killed jfk'.  and the end result was - didn't really matter who actually pulled the triggr,  j edgar hoover had made clear that if somebody did it, he wouldn't do anything about it.  not sure if people can follow my vodka drift but - it's really the same thing. 

bennie says - don't care how many i print, as long as there are lots of them flying around.


Winston Churchill's picture

Some trader found spoor of the Abominable Bernanke on

the floor.

No other reason for the ramp I can think of.

icanhasbailout's picture

It is amazing to see the market reactions though, it is like the market itself has learned how to do what the TBTF have been doing all along - frontrunning the central banks.

Overfed's picture

I was over at the local Barbarous Relics Emporium today, and guess what? There wasn't a single ounce of physical silver or gold in the place. no junk silver, no rounds, no eagles, no gold whatsoever. Only coins with numismatic value beyond their melt (for now).

I did talk the owner out of a Morgan for melt as it had a bezel on it to make it a pendant.

Physical PMs, get 'em when and wherever you can.

ebworthen's picture

So volatility is a sign that things are improving, right? 

Mustard seeds and green shoots and all that...

Definietly going to need to buy four more martini glasses and re-stock the humidor.

Thank God it's warm out and the hummingbirds are flitting about.

long-shorty's picture

On CNBC, Bill Griffith keeps talking about what an eventful and important day today was. How absurd. It makes me want to puke on my shoes.

We're not even short, just way reduced exposure on both sides. But really, central banks say they'll do something if bad stuff happens, and the BoE says it will give out liquidity in exchange for crappy collateral, and either one of these things are news???

I hope there is more "news" in the U.S. tomorrow on options expiration day to ramp the market, so we can further reduce our exposure.