Did The Fed Leak The European Bailout Decision On Monday Morning? A Visual Exhibit

Tyler Durden's picture

We talked about the total disconnect between US equities and the rest of the global financial market on Monday morning. At the time, many market participants commented that they had not seen this kind of disconnect so broadly and how strange it was - and with reasonable volume (unusual for an upswing). Well, now we have some details on what exactly was said and done on Monday with the Fed decision, perhaps it is clear that someone somewhere was tipped off that this was coming as the rest of the world's risk assets leaked inexorably lower and US equities hugely outperformed.

Instead of comparing ES (the e-mini S&P Futures Contract) against each and every risk asset, we use CONTEXT (which attempts to aggregate many of the global risk drivers into one indicator). Its clear at least from the chart that regimes shifted dramatically on Monday and we also noted that European equities were so dramatically disconnected from credit that evidently someone was 'guessing' really well with a large amount of flow.

Chart: Bloomberg

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RacerX's picture

nah, pure coincidence.

..now back to my porn.

Fukushima Sam's picture

Must... stuff...  debt...  hole...  with...  fiat... (gasp!)

Comay Mierda's picture

if it looks like a piece of shit, smells like a piece of shit, then its gotta be the Bernank

Hober Mallow's picture

Politicians can't stop being what they are: a bunch of greedy bastards.

NotApplicable's picture

More properly known as power-hungry tools.

redpill's picture

You cannot trade this market anymore without insider information, and this demonstrates it.

Sudden, arbitrary intervention that undoubtedly buried many investors who had made rational investment decisions based upon the realities of the market.  People working in favor of actual price discovery, real fundamentals, demonstrated price action, all suddenly fucked because a handful of madmen around the world think they can centrally plan the global economy.  And they call this a rescue?  Only for morons who were long the wrong stocks.


Harlequin001's picture

Look I know these people and I can categorically assure you that they are of the finest fucking integrity, and that they would die before doing such a thing...

Harlequin001's picture

and my appointment to Treasury Secretary comes in 5.. 4... 3... 2...

Thomas's picture

Gotta have Lunch with Hank.

ActionFive's picture

Price action Friday and Sunday said this was a fed move.

Retail movement/reactions are gone.

Whatta's picture

And to think...the downgrade of the banks rating JUST BEFORE this. Talk about a paper-over, dilution of news cycle and orchestrated POS.

Who has the playbook? I wanna know what is next too!!!

Catflappo's picture

I just met with someone who works for a bank here in New Zealand - he's not a trader, he's on a product development side so he's pretty disinterested in markets.... but anyway, he tells me that on Monday (i.e. Sunday in the USA) his office was TOLD that the banking downgrades were about to take place !

CORNGUY's picture

I agree.   People with power and influence never get together and use their combined knowledge to profit.  Racer, that would be unethical.    </sarc>

Smiddywesson's picture

People with power and influence never get together and use their combined knowledge to profit.  

Yup.  There will never be rational markets, because people with power and influence can't make a buck without exercising that power and influence on a market that otherwise would be a level playing field.

Markets always were, and always will be, fixed. 

JustObserving's picture

How do you like your job at the SEC?

ucsbcanuck's picture

Why am I not surprised?

Cleanclog's picture

Of course there was leakage.  That's part of their "expectations/confidence/management".  Fed, Treas, Admin, Congress (except Paul) all wink wink nod nod.

Turd Ferguson's picture

And this surprises whom?

GeneMarchbanks's picture

Uhm ... it would surprise CNBC if they weren't too busy not reporting on this...

RockyRacoon's picture

It WAS mentioned this morning by that funny looking guy with the bit o' white in his chinny-chin-chin lip hair.   That Pete Najarian fella.   He did raise an eyebrow in mentioning it and look longingly at the camera ("Look at me! I know something you don't").   That was all.  No follow up, of course.  That would indicate a confirmation of market collusion, and we shall not have any of that.

Irish66's picture

How did we miss it?  

hedgeless_horseman's picture



We should have listened to Todd Martin.

The Big Ching-aso's picture



Does a stick smell like shit when it's stuck in someone's ass?


RockyRacoon's picture

Only if you pull it out and sniff it.  I'd advise against such action.

homersimpson's picture

Unfortunately, this chart is as helpful as Robo's hindsight predictions.

Eagle1's picture


Is it their fault that they all came to the same brilliant conclusion at the same time?

arm50's picture

That is part of their, " improving communication with the public."

misterc's picture

It's leaked in order to strengthen the banks' balance sheets. Prop trading and so forth.

DarkestPhoenix's picture

Leaked to strengthen bonuses, is likelier.

slaughterer's picture

Any chance of this compressing in the near future?  I think, yes.  

Captain Benny's picture

No oversight of the Fed... I'm not suprised.  Lets just keep watching bond yields in Europe, they'll have to do a LOT more to fix the Euro problems.

lizzy36's picture

This is the best Bernanke can do. Make NO mistake leaking this decision was part of his effort. This was a coordinated effort and a coordinated leak. 

Don't forget Bernanke's 3rd and most important mandate: "wealth effect".

Despite his 2002 speech he knows that it will be the end of the Fed as we know it if he actually started directly buying EU debt.

This is an election year, with 9% unemployment and record deficits, Geithner can't spend one single YANK cent on bailing out the EU without killing Obama's 2nd term dream.

So here it is boys and girls, the desperate act of a desperate Central Bankers.

November fund statements will be mailed tomorrow. Allowing the Season of Shopping to continue unimpeded. Exactly what Bernanke wanted.

YesWeKahn's picture

This is why Princeton is ranked 1st college in the country. They teach you how to cheat.

azusgm's picture

And now we have a selling opportunity. I sold out today. When a dividend settles on the 5th, I'm out of the brokerage account. The markets will never be a safe sandbox until the crooks are gone, therefore I probably will never be going back. 

IMO, bullish for selected rural real estate because trust in "systems" will be deteriorating even further and whatever money is left has to be somewhere along with hard assets, food, water filters, etc. I wish I owned a water well company.

BlackSunshine's picture

Maybe this should be rebranded as QE 3....not the "coordinated action by 6 central banks", not we should just call it something that sheeple can relate to.

ffart's picture

HOW DARE you implicate the Fed in fraudulent activity. Oh wait, our entire monetary system is a fraud? Carry on, then.

Dr. Engali's picture

I'm curious about the 190,000 Jan  call options on BAC opened up yesterday.

firstdivision's picture

I'd take that as a sign that the bank is trying to profit from vol, so when vol does drop buy some puts.

79's picture

I'm sure it's just someone hedging themselves. Nothing to see here. Apart from a fleet of helecopters.

Tense INDIAN's picture

whatever they do ...we are more likely to have a HUGE DOLLAR RALLY ....look at the charts ......this could play out ::::

is that a HUGE INVERSE HnS in the dollar  charts ???


pauhana's picture

Still can't figure out how the likelihood of a major European bank failure is worth 400+ pts on the Dow.  Doesn't sound like good news but I guess in this crazy old world, it is.

viahj's picture

dontcha know, pensions are heavily in equities and they control large voting blocks, gotta keep the sheep all pointed in one direction...to the slaughter (post election).  TPTB can't be all that concerned with equities, they go after real assets.

The Fonz's picture

I can think of a way. The market usually turns on any belief that is too widely held. Everyone believes this bailout is going to work.. for now.  The market USUALLY proves you wrong.  You would think it would be easier to make money knowing that :(

TideFighter's picture

There should be a Johnny Carson "fork in the road" a bit after 9:00.


I accepted this thesis on faith, now I know there was a leak and I believe.  

The Big Ching-aso's picture




"No tourniquet?"

"Not this time, it's only a severed arm."