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Equities Underperform As Credit Roundtrips Ending Miserable May For Europe
It seemed the 'but but but we're oversold' argument was holding up in early trading in Europe as EURUSD, sovereign bonds, corporate and financial credit, and stocks rallied out of the gate. It didn't take long however for the technicals from CDS-Cash traders to wear off and Spain and Italy sovereign debt started to leak back wider. This accelerated pushing everything off the edge as European stocks and financials & investment grade credit fell to recent lows. Interestingly high-yield credit (XOVER) remains an outperformer. By the close, credit markets were pretty much unchanged from last night's close having given back all the knee-jerk improvements on the day but equities remained lower - with a late day surge saving them from total chaos. EURUSD gave back all of its early gains to end the European day lower once again - though off its lows - even as Germany 2Y trades with 0.2bps of negative and Swiss 2Y rates plunge below -25bps. For the month, EMEA stocks were a disaster - Italy and Spain down 12 and 13% and the broad Euro-Stoxx -8.3% (-8.7% YTD).
Credit roundtripped - giving up its earlier gains (orange curves) but stocks (red curve) ended notably lower...
EMEA stocks were just ugly in May - with Spain and Italy missing out to Russia's disaster
Sovereigns followed a similar path as credit today but ended higher in yield for Spain and Italy...
Charts: Bloomberg
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Another save today when the S&P dropped below 1300
I am under 1300. Save me! Save me! For no fucking reason at all.
Summer 2007: FT editor predicts Mr Bond spreads will rubber band tighter any day due to mean reversion and sub-prime is contained anyway
And next to bring the whole thing down was 1 morning we were told there was an overnite run on the banks. Simple as that.
And we were also told with a scolding finger that Bear went down because they ticked Wall Street off by refusing to rescue LTCM. Vendetta. They needed killin. They crossed the capos. Finance had little to do with it.
US equity markets tack on another 8% outperformance over Europe after years of the same. Sure, I wouldn't touch European banks, but not US banks either, and after that you are left with high-multiple bets on yet more US consumption and overindulgence versus a lot of European engineering and industrials that are trading at 5x cash flow. That's what insane headline-based macro trading gets you.
Tyler spoke too soon, markets ripping now...I thought Plunge Protection Team took a sabbatical.
Another missed expectation. Let's start quantifying all of them. See my idea below please.
http://www.zerohedge.com/news/adp-private-payrolls-print-133k-miss-expec...
Great idea and a powerful weapon. I'm sure it would be linked from all over the internetz.
The average person sees everything in black & white so it would be a good way to relate to them on their level. If anyone knows how to code it, I'd be the bookkeeper.
Who cares?! I plowed my life savings into a stalwart tech last year. One of those buy it and forget about it, sure things. I think I'll check on it today just for ha-has. My friends used to joke that the RIMM job would be on me. We'll see who is laffing now.
Europe's closed...and look at the melt-up ensue
Just went green
Never any doubt.
Portugal got gutter stomped.
Don't forget today is month end window dressing, a very popular sport in Amerika.
the market is bullshit green. hooray, its decoration day
Amazing last minute rally in Europe .. the CAC is above 3k in Paris ... where it was a decade ago or so.
The rally was even more impressive in London.
The stock markets are just the boring version of Vegas. Actually they're closer to Atlantic City ...
London and Paris closed up today.
I guess the debt problem is solved.
Good job Europe - socialism works.