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Credit Slumps, Equity Pumps, And Volume & Volatility Dumps

Tyler Durden's picture





 

UPDATE: MANU below IPO price at $13.90 now....sigh

You know the score by now. Equities stage late day surge to green driven by an irrepressible squeeze lower in short-term volatility but high-yield credit doesn't follow suit as volume remains absolutely amazingly incredibly non-existent. S&P 500 e-mini futures (ES) ended the week nicely higher - closing today at the highs over 1402 (at the day-session close) with VIX at 5 month lows well under 15% (down 0.5 vols on the day which is a big move for a 1.5pt ES gain). HYG (the high-yield bond ETF) ended lower again - basically 5 days in a row - which is very unusual given equity's push to new highs. Risk assets in general did leak higher as stocks pushed up but are notably less bullish (and it appeared from our chats that credit desks left early and the IG and HY indices were simply being reracked higher - as opposed to traded there). Gold outperformed on the day - and it seemed like the EOD ramp in ES was a magnetic pull to Gold - as it disconnected from Treasuries and FX quite handily. The USD ends the week up 0.29% (yes, up), the S&P 500 up 1% while Treasuries limped a little higher in yield today to end the week 5-10bps higher (and steeper) in yield and commodities up the same as stocks (around 1%) aside from oil which managed 2.2% on the week.

NYSE Volume....dead

S&P 500 e-mini futures saw the lowest volume in years this week (as low as xmas-weeks) with the week's range the lowest in 16 months...It does make us wonder if Knight was using ES as its market overlay to manage its market-making exposure as 'nothing' changed this year in ES volumes in general until this week and suddenly now a cliff-dive!

 

VIX smashed over 22% lower in the last 7 days - this has happened twice before in the last year and did not end well for the bulls...

 

 

 

Gold outperformed but stocks tried to catch up into the close...

and credit continues to underperform...

 

Credit underperforming not just stocks (green) but notably weak relative to intrinsic value (dark red and lower pane). We suspect they are trying to soak up the selling pressure in the ETF before they are forced to unwind in the cash bond market (and we pointed out this week that HYG has little cash left)...

 

but FX markets exhibited major dispersion this week with EUR 0.9% weaker vs USD and CAD 0.9% stronger as the DXY closed up 0.3% (with the now ubiquitous US open to EU close actin dominating)...

 

Charts: Bloomberg

 

Bonus Charts: MANU Afterhours hit $13.90...


 


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Fri, 08/10/2012 - 16:17 | Link to Comment fireangelmaverick
fireangelmaverick's picture

Need to hump some hot rumps.

Fri, 08/10/2012 - 16:27 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Berlin airport unable to service it's debt.
http://www.thelocal.de/national/20120810-44267.html

German fascist authorities buy UBS database of German tax-evaders. Germans start fleeing their country in advance of complete fascist state implementation upon euro collapse:
http://www.thelocal.ch/page/view/german-tax-officers-buy-data-on-ubs-cli...

Switzerland delays new banknote release. Are the Swiss waiting for euro-collapse to issue GOLD FRANC backed paper notes?
http://www.thelocal.ch/page/view/faulty-paper-blamed-for-new-banknote-delay

Fri, 08/10/2012 - 16:32 | Link to Comment Piranhanoia
Piranhanoia's picture

Berlin tower to Air France jet incoming;    "Your credit card didn't go through for landing payment and subsequent privileges.  Please hold until we get the euros.

Fri, 08/10/2012 - 16:35 | Link to Comment francis_sawyer
francis_sawyer's picture

 "Even the dump is dumpin'"...

~Tony Manero

Fri, 08/10/2012 - 21:21 | Link to Comment ZeroAvatar
ZeroAvatar's picture

My beer belly has it's OWN beer belly!

Fri, 08/10/2012 - 16:45 | Link to Comment walküre
walküre's picture

Berlin Airport needs to find 1,17 billion Euros...

MONTI!!!!! To the printers!!!!

Seriously though. Imagine this shit going down in Germany against the backdrop of German taxpayer funded bailouts to Greece, Spain, Italy, France ....

This toast has two sides and they're both BURNT!

Fri, 08/10/2012 - 17:05 | Link to Comment Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Preferably scrump a plump rump. OK, chump?

Fri, 08/10/2012 - 16:18 | Link to Comment mrjig27
mrjig27's picture

I usually kiss my kids before I tuck them in at night, so I like to keep it clean. But after watching today’s meld up? Just this once..

 

Hey Ben, FUCK YOU!!  

Fri, 08/10/2012 - 16:21 | Link to Comment Bear
Bear's picture

I know that you'll be calm by bedtime ... insanity is expecting anything else from the market (We are mark and they are mark-get)

Fri, 08/10/2012 - 16:45 | Link to Comment Manthong
Manthong's picture

You really should include Tim and their boss, Evelyn in that shout out.

Fri, 08/10/2012 - 16:52 | Link to Comment Squid Vicious
Squid Vicious's picture

you meant Lloyd, right?... is Evelyn his confirmation name or something?  

Fri, 08/10/2012 - 17:14 | Link to Comment LMAOLORI
Fri, 08/10/2012 - 16:18 | Link to Comment lineskis
lineskis's picture

"and credit continues to underperform..."

Equity, watch out below...

Fri, 08/10/2012 - 16:22 | Link to Comment Winston Churchill
Winston Churchill's picture

Standing by my top call of last Friday.

When this sucker rolls over,aint nothing going to stop it.

Fri, 08/10/2012 - 16:28 | Link to Comment French Frog
French Frog's picture

Yeah but until that happens the bears will get spanked many times trying to pick the proverbial top (sad really)!

Fri, 08/10/2012 - 16:30 | Link to Comment Brother Sebastian
Brother Sebastian's picture

What was your call last Friday?  I agree that the SPX is topping...probably just below the April 2 intraday high.  My guess is that this will occur sometime on Monday.

Fri, 08/10/2012 - 16:26 | Link to Comment French Frog
French Frog's picture

Oh please, in case you haven't watched properly it's "equity, watch out above"; until it changes (and it will ... eventually) the bulls are in charge and the bears got forced to cover ... yet again. No need to worry if you're a bull at the moment: recent gains have been so substantial that a stop loss can be safely positioned and even when it'll get hit, the profits will be nice.

Fri, 08/10/2012 - 16:19 | Link to Comment Bear
Bear's picture

Amazing .... all the real action 'after' the close. What do they do ... turn their HFT machines off at 1:15?

Fri, 08/10/2012 - 16:19 | Link to Comment Meesohaawnee
Meesohaawnee's picture

no its Reuters PUMPS. this is fucking out right disgusting!!

http://finance.yahoo.com/news/analysis-obama-presidency-great-stocks-174...

Fri, 08/10/2012 - 16:28 | Link to Comment pods
pods's picture

Wow, stroll through the comments on that one if you ever thought the comments on ZH have gone downhill!

So many people, so little thinking.

pods

Fri, 08/10/2012 - 16:33 | Link to Comment Dr. Engali
Dr. Engali's picture

I like to read the commentary on the yahoo boards. It helps me appreciate the commentary here. It also helps my to keep expectations real when I see what kind of stupidity is out there.

Fri, 08/10/2012 - 16:36 | Link to Comment pods
pods's picture

I have started to look at the comments on stories on my online local rag, and to me it seems that the VAST majority of people will happily give up any freedom they have left for someone in authority tell them that everything will be fine, and that monsters are not real.

It is going to be a very rude awakening.  

Like a drowning man will use anything to keep his head above water, when things get rough people will sell out anyone and anything to have their comfort back.

pods

Fri, 08/10/2012 - 16:47 | Link to Comment Rainman
Rainman's picture

"Nobody ever went broke underestimating the intelligence of the American public."

H.L. Menckin

Fri, 08/10/2012 - 16:59 | Link to Comment Hype Alert
Hype Alert's picture

"Like a drowning man will use anything to keep his head above water, when things get rough people will sell out anyone and anything to have their comfort back."

Seems like the country did that last election.  I'm confused on why so many still want him.

Somehow we just ping pong back and forth, lose more freedom and never move forward.

Fri, 08/10/2012 - 19:26 | Link to Comment disabledvet
disabledvet's picture

The media has us right where they want us. We do not PARTICIPATE. Try and get a guy or gal elected...it will keep YOU honest...and everywhere and always "that's the hardest thing."

Fri, 08/10/2012 - 16:34 | Link to Comment magpie
magpie's picture

The psyops agentur is too centralized for its own good. One problem 'the other side' won't ever have to deal with lol

Fri, 08/10/2012 - 17:12 | Link to Comment Legolas
Legolas's picture

Unbelievable.  Reuters PIMPS is more like it.  Excuse me, but I'm going to go lose my lunch.

Fri, 08/10/2012 - 16:23 | Link to Comment govttrader
govttrader's picture

Seriously...last minute ramp in ES...feels like a sale

http://govttrader.blogspot.com/

Fri, 08/10/2012 - 16:23 | Link to Comment Dr. Engali
Dr. Engali's picture

So is this how Obama and the Bernank grind the bourgeoisie between the millstones of taxation and inflation? A market that offers no return and bonds that offer no yield.

 

“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”

 

Vladimir Lenin

Fri, 08/10/2012 - 16:26 | Link to Comment LongSoupLine
LongSoupLine's picture

One step closer to revolution.

Fri, 08/10/2012 - 16:27 | Link to Comment foodstampbarry
foodstampbarry's picture

JPM,  Golden Saks Long. USA short.

Fri, 08/10/2012 - 16:29 | Link to Comment Dr. Engali
Dr. Engali's picture

Speaking of taking a dump.....

Fri, 08/10/2012 - 16:29 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

Overnight futures losses erased. All US equity indices positive.  Bad news can’t touch this market. March higher continues.

Who is buying this rally?Answers on the back of a stamp please.

http://ftalphaville.ft.com/blog/2012/08/10/1115141/whos-buying-this-rally/

Fri, 08/10/2012 - 16:32 | Link to Comment EvlTheCat
EvlTheCat's picture

Drunk and OT:

The world has absolutely gone mad.  When bikini clad women can't do a fashion show on an airline because of PC bullshit:

Runway clear for take off!': Vietnamese passenger airliner fined for hosting mid-air beauty pageant with scantily clad Hawaiian dancers

http://www.dailymail.co.uk/news/article-2185945/Runway-clear-clothes--Vi...

However the airline has now been fined after a video showing the unusual high-altitude antics was posted on YouTube and became a hit on social network sites.
The Vietnam Aviation Authority has ordered the airline carrier, which was only launched last year, to pay £600.

I can tell you one thing if I was a passenger I would pony up to help pay the fine.

 

Fri, 08/10/2012 - 16:37 | Link to Comment Freewheelin Franklin
Freewheelin Franklin's picture

Off Topic

I just caught the end of an interview with Bill Black on CNBC where he totally destroys the Talking Heads regarding the prosecution, or should I say lack thereof of fraud.

"Oh boohoohoo. If you prosecute Goldman Sachs, you have to prosecute everyone, you can't do that, boohoohoo."

 

Man, FUCK these assholes! Maria Bartoromo can suck my cock!

Fri, 08/10/2012 - 16:42 | Link to Comment engineertheeconomy
engineertheeconomy's picture

Lets team tag the whore...

Fri, 08/10/2012 - 19:30 | Link to Comment disabledvet
disabledvet's picture

What's your next best pick up line?(after that one of course)

Fri, 08/10/2012 - 17:21 | Link to Comment Getting Old Sucks
Getting Old Sucks's picture

Video link?  Like to see that.

Fri, 08/10/2012 - 16:39 | Link to Comment 101 years and c...
101 years and counting's picture

olympics end on sun.

and so does the illusion.

Fri, 08/10/2012 - 16:47 | Link to Comment walküre
walküre's picture

Beijing 2008 and ensuing collapse REDUX

Fri, 08/10/2012 - 16:40 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

She probably has. Her damn mouth is so big you just didn't feel it.

Fri, 08/10/2012 - 16:41 | Link to Comment IMA5U
IMA5U's picture

$1.1bn went into high yield funds last week

 

credit is hardly slumping

 

Fri, 08/10/2012 - 16:51 | Link to Comment clcmae
clcmae's picture

I think the best thing that can happen for market reality at this point is for the Fed to ease.  BFD...then what's going to happen?  Stocks are going to rally?  Based on what?  

If things are so fucking bad that central banks on 3 continents are easing, is that really a cause for asset price appreciation?

Fri, 08/10/2012 - 16:59 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

In case you need a reminder of what to do when QE hits, here is the video. Best not think. JBTFDYFI

http://www.youtube.com/watch?v=jllJ-HeErjU

Fri, 08/10/2012 - 17:34 | Link to Comment walküre
walküre's picture

The only "dip" you can maybe buy is in ETFs tracking the indexes. If you're lucky they will perform according to market moves.

If you bought dips in most equities since 2010 and held through 2011 and 2012, you would have lost money by now.

Bernanke put is a myth.

Tangible assets are the way to go.

Fri, 08/10/2012 - 17:01 | Link to Comment no life
no life's picture

I know you are, 'cause it's fuck or walk..

Fri, 08/10/2012 - 17:58 | Link to Comment magpie
magpie's picture

Oh i'm all right.

If it took 200 Euros to turn things around, i invite
you to spend 800 Billion to take my 800 'Euros'. You know i don't use stops, bad kid who grew up during the Spring of 2009.

Fri, 08/10/2012 - 18:11 | Link to Comment LG_Knight
LG_Knight's picture

Was anyone clever enough to buy/sell the MANU roundtrips to $14 after ZH post today?

Fri, 08/10/2012 - 18:52 | Link to Comment radicall
radicall's picture

Last 2 volume slumps as shown in the chart were followed by nice strong rallies. SPX 1500??

Sat, 08/11/2012 - 01:52 | Link to Comment dcb
dcb's picture

today another gret day example of all our capitial markets fucked up with algos

the two o clock ramp as usual, for no reasons, exactly to back to the point one should once again put in a short. the usual sell, of a hower low, means of course a buy at that low when it's algo land. Itrade,but I am starting to get so frustrated, maybe it's time to remoive my liquidity as well. because we have to descend in an exact channel of course until the exact moment when we don't and all hall breaks loose

we did it three days last week until the proper entry point, so fat this week four days dicking around

on uyg you'd think four days of lower highs would equal some kind of sell signal, but nope, not with algo land fucked up markets where nodogy hold securities overnight, so just ramp up and sell at end of day no matter where the situation is

it really astounds me at how bad things are, and the fact that nobody actuall wants to fix it.

yjer only thing we can say for certain is that europe and asi are going to sell out idiot algo ramp and take profits of the retail sheep, while the algo's didn't stay in overnight

cause we can see great pump and dump on uyg from 3:42 to  to 3:48 on that security. it's even worse than usual, because at least a week ago the market would go down to an entry point the way it should, but clearly someone haschanged the nature of the trading algo in the past week

at least last week it only took three days to get where we needed

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