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Equities Fumble As Broke Banks Mounting

Tyler Durden's picture




 

Volumes were not that far below average today as the Dow and the S&P (but not the miraculous NASDAAPL - not that story again please!) ended the day lower after some significant intraday volatility early (around the ECB/BoE decisions and jobs/ISM data in the US). S&P 500 e-mini futures levitated off the day's early lows to stabilize around VWAP before testing up to unchanged and then losing it all into the close on heavy volume and larger average trade size. Financials were the biggest losers, as the big banks dumped off most of their EU-Summit gains (with JPM and MS down over 4% today), followed closely by Energy names - even with WTI basically treading water close to close (despite some +/-2% swings early on). USD strength saw Silver lagging on the day and gold dropped a little but rather notably since the EU-Summit, gold and the S&P have been trading more in lockstep (with Treasuries and the USD pointing to more risk-off perspectives). Elsewhere in commodity-land, corn continues its upsurge - now up 40% in the last 3 weeks. After falling off the 1.25 cliff as Draghi disappointed, EURUSD tracked sideways just under 1.2400 for the rest of the day; carry FX pairs tended to drift lower most of the day but the afternoon was quiet. Treasuries limped a little higher in yield into the close - led by the long-end - but ended the day down a few bps from Tuesday's close (with 7/10Y outperforming). Treasuries are unch from the last NFP report (as is EURUSD) while ES is 55pts higher - hhmm. VIX ended the day up almost 1 vol accelerating above 17.5% as futures dived after-hours and cross-asset class correlation remained relatively low today - though ES traded with CONTEXT - as Europe's tensions were once again shrugged off once it had closed and then remembered into the US close.

Gold and Stocks seem joined at the hip here post EU-Summit as Treasuries and the USD (strength) say something different...

from the last NFP report, Treasuries and EURUSD are unchanged but the S&P a perfectly sensible 55pts higher...

Broad risk assets drifted lower overnight to ES and recoupled early ion the morning as Europe opened. Some disconnects intraday were evident with equities generally underperforming from ISM to Europe's close. Risk recoupled for the rest of the day with a brief rally over-reaction and sell-off over-reaction into the close...

The high-beta equity exuberance - or is it "when in doubt, buy AAPL" from the long-only crowd looking at rumors of a new minipad - has pushed the NASDAQ up over 5% from Pre-EU Summit and it notably outperformed this afternoon...

 

and Financials were the laggards in a big way today - all trading notably lower than the Friday post-EU-Summit decision open and reverting a lot of the last Thursday pre-EU-Summit rumor move also...

but on the bright-side for now, it appears JPMorgan's equity and CDS have realigned for now - notably lower in stock price than when we pointed out that CDS was still seeing more pain (although into the close JPM CDS was popping back wider again suggesting a little more weakness still relatively speaking to come for its stock)...

 

Charts: Bloomberg

Bonus Chart: Corn's magnificent weather-fueled ripfest (and comment via Reuters)

 

U.S. corn surged 5 percent on T hursday to its highest price in over a year and soybeans jumped to within sight of their record high as new forecasts offered no sign of rain relief for withering crops. With fields now at the mercy of what may be the worst Midwest drought in nearly a quarter century, grain traders ignored the potentially bearish influence of a rising U.S. dollar and focused on growing signs that one of the biggest corn crops ever planted by U.S. farmers is now shrinking by the day.




Corn prices have surged by nearly 30 percent over the past two weeks, dragging wheat and soybean prices up with them and threatening to kick off another bout of food-inflation fears. Only a few times before have prices risen so far, so fast - once was in 1988, the last time the U.S. heartland faced such a dire drought.

"The general theme is going to be that the hottest weather is in the very near term but the rains still will be slow to pick up here over the next couple of weeks," said Joel Widenor, a meteorologist with Commodity Weather Group.

 

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Thu, 07/05/2012 - 16:34 | 2590132 Biggvs
Biggvs's picture

Broke Banks Mounting or Brokebank Mountain?

 

http://www.flickr.com/photos/us_army_rolling_along/3763278966/

Thu, 07/05/2012 - 17:05 | 2590173 Kitler
Kitler's picture

"corn continues its upsurge - now up 40% in the last 3 weeks"

I'm not quite sure if it's just another harmless increase in the number of unemployed corn-fed couch potatoes at work here or if Jamie has begun to corn-er the worlds food production in his ongoing "Work of God" campaign.

Any way you look at it it's time to grab a bowl of popcorn and take a seat while you still can.

Thu, 07/05/2012 - 17:18 | 2590206 Pinto Currency
Pinto Currency's picture

 

I'll say the Broke Banks are Mounting - they are mounting us.

Thu, 07/05/2012 - 17:28 | 2590231 Not Too Important
Not Too Important's picture

The rising price of corn, wheat and soybeans is going to tear through the third world and bring massive starvation and rioting.

The Arab Spring wasn't about democracy, it was about the price of food, specifically flour for bread.

Less corn for the subsidized ethanol producers, who will still be taking corn away from the 'useless eaters'. A big FUCK YOU to K for that, you bastard.

Worldwide air, water and food radiation contamination, a complete breakdown of the financial system (LIEBOR) and a monstrous percentage of the world's food supply eliminated.

Buckle up, buckaroos!

Thu, 07/05/2012 - 17:25 | 2590224 Stock Tips Inve...
Stock Tips Investment's picture

It is difficult for the market if banks continue rising drop significantly. In the following days we will see if this rise is consolidated or start a new leg down. In both cases we have good opportunities to make profits. You just have to be vigilant.

Thu, 07/05/2012 - 16:39 | 2590140 VonManstein
VonManstein's picture

is it me of has tyler started clssing gold as a risk asset?

Thu, 07/05/2012 - 16:42 | 2590145 Lost Wages
Lost Wages's picture

Not Tyler, but maybe hedge funds. I know silver has been acting that way.

Thu, 07/05/2012 - 18:39 | 2590183 VonManstein
VonManstein's picture

guess your right tylers just pointing out the way the market is treating gold. some days risk asset somedays safe haven. silver indeed more so.

worth considering that

DXY is pretty damn good at its high of the year.. nipping at 83 .

EUR is smahed again near its lows of the year in 1.23 zone

gold is 5% above it low of the year

silver also 5% off of its lows

and so hidden amongst all the mindless thrashing around gold and silver do appear to be diverging, howerver slowly. PM buyers cannot and will not be stopped.

BLS friday then and we'll see what it brings.

Thu, 07/05/2012 - 20:50 | 2590646 ATG
ATG's picture

re DXY is pretty damn good at its high of the year:

Would you believe 100?

re the miraculous NASDAAPL:

When the bough breaks, the cradle will fall:

We may have a trade tomorrow:

http://richcash8tradeblog.blogspot.com/

 

Thu, 07/05/2012 - 16:41 | 2590142 not fat not stupid
not fat not stupid's picture

US afternoon sessions are officially summer cesspools. what dreck.

Thu, 07/05/2012 - 16:41 | 2590144 Not Too Important
Not Too Important's picture

How much is the legal setaside for the top 16 banks manipulating the LIEBOR? Where's Egan-Jones on this?

Thu, 07/05/2012 - 17:16 | 2590208 Panafrican Funk...
Panafrican Funktron Robot's picture

These are the core banks involved that will likely be the biggest targets.  As with anything, be cautious trying to turn this into anything tradeable, the force is strong in these ones.

  • Barclays Bank plc
  • Deutsche Bank AG
  • HSBC
  • JP Morgan Chase
  • Lloyds Banking Group
  • The Royal Bank of Scotland Group
  • Thu, 07/05/2012 - 17:53 | 2590220 Not Too Important
    Not Too Important's picture

    And how about the Fed and the Bank of England? As mentioned elsewhere, aren't those 7 banks you list above, on the boards of the Fed and BOE? Aren't they all US Primary Dealers? Are they the equivalent to PDs in London? Where does the BIS fit in all this? These are private companies, not shielded from lawsuits.

    Oh, the shit that's going to come out . . .

    And, btw, who might the rest of the 16 be, PF? I think the world would like to know.

    Thu, 07/05/2012 - 16:44 | 2590148 gjp
    gjp's picture

    Fuck the Nasdaq and the stupid buy-at-any-price momentum monkey trading that we've had to live with for over a decade now.

    Thu, 07/05/2012 - 17:07 | 2590186 Paul Atreides
    Paul Atreides's picture

    Put your wealth into gold and silver and find a productive job. Pushing paper does fuck all for humanity and just extends the bullshit.

    Thu, 07/05/2012 - 16:53 | 2590157 midgetrannyporn
    midgetrannyporn's picture

    less corn = less corn ethanol

    less corn = less corn syrup.

     

    a win-win!

    Thu, 07/05/2012 - 17:00 | 2590174 Joe Sixpack
    Joe Sixpack's picture

    That is a corny comment!

    Thu, 07/05/2012 - 17:20 | 2590217 francis_sawyer
    francis_sawyer's picture

    save the potash...

    Thu, 07/05/2012 - 17:10 | 2590193 DoChenRollingBearing
    DoChenRollingBearing's picture

    $500 more out of the ATM today...

    Thu, 07/05/2012 - 20:31 | 2590617 CPL
    CPL's picture

    Might want to get some silver...it's about to no longer be on sale.

    Thu, 07/05/2012 - 17:10 | 2590195 buzzsaw99
    buzzsaw99's picture

    Broke Banks Mountain? lulz

    Thu, 07/05/2012 - 17:11 | 2590199 CheapBastard
    CheapBastard's picture

    Outsourcing is the biggest growth industry...read about it here at The Onion

     

    http://www.youtube.com/watch?v=rYaZ57Bn4pQ

    Thu, 07/05/2012 - 17:20 | 2590216 slaughterer
    slaughterer's picture

    AAPL will miss earnings if it does not channel stuff here between product cycles.

     

    Thu, 07/05/2012 - 17:29 | 2590233 Everybodys All ...
    Everybodys All American's picture

    I think you're right on the possible miss. Europe has to have an effect at some point on earnings for everyone. We will know real soon how much.

    Thu, 07/05/2012 - 20:44 | 2590644 ATG
    ATG's picture

    And China tariffs...

    Thu, 07/05/2012 - 17:21 | 2590218 reader2010
    reader2010's picture

    Equity has been in the Multi-Generational Secular Bear Market since March 2000. What else to expect?

    Thu, 07/05/2012 - 17:35 | 2590242 hugovanderbubble
    hugovanderbubble's picture

    Thx for this excellent daily recap.

    Thu, 07/05/2012 - 17:49 | 2590270 GMadScientist
    GMadScientist's picture

    Mmmmm....Bagholder Friday.

    Paging RobotTrader. Come in RobotTrader.

    Thu, 07/05/2012 - 18:06 | 2590310 q99x2
    q99x2's picture

    When Bove's stinkface showed up on CNBC saying banks won't need their living will plan I took that as a FAZ buy signal.

    Thu, 07/05/2012 - 18:29 | 2590352 yogibear
    yogibear's picture

    Banksters can keep cooking the books and transfering reserves to offshore entities.

    Leave a hollow bank without reserves.

    Let the taxpayer bail out depositors and investors!!!

    Banking crimnals,  Bernanke and the fed will cover up any fraud.

     

    Thu, 07/05/2012 - 21:31 | 2590701 Goldilocks
    Goldilocks's picture

    [PDF] Weather as a Force Multiplier: Owning the Weather in 2025
    http://csat.au.af.mil/2025/volume3/vol3ch15.pdf

    Do NOT follow this link or you will be banned from the site!