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Equity Traders Petition To Create More Bond Market Holidays
By Peter Tchir of TF Market Advisors
Equity Traders Petition To Create More Bond Market Holidays
Yesterday was one of the strangest days in awhile - and that is from a long list of strange days. The most confusing part is that over the weekend Dexia went through some form of nationalization - the details of which and the need for which remain sketchy. Erste decided to take some big write-downs on CDS positions it had written, and Merkel and Sarkozy yet again held a joint press conference to announce that now they were really serious about saving everything and everyone.
European stocks and credit had a relatively muted reaction. Stocks were up small. The Dax for example was drifting from slightly down to up less than 1%. SOVX was a touch wider and MAIN was a few bps tighter. Then the US came along and told Europe that they didn't realize how good they had. Yes, US equity players came along and told Europeans they didn't understand what had happened in their own backyard. The US stock market dragged Europe higher and tighter with it. Investors who were short IG17 or HY17 were hitting bids in MAIN, XOVER, and buying JNK, LQD, and HYG, along with SPX.
Today, Europe was basically treading water and tried to do better at 7am as the US opened for business. Since then we have started to drift wider and lower. Part of this is going to be funds getting their positions squared away as they can now sell some IG17 and buy back their other hedges. Credit traders who are left scratching their heads about how things were "fixed" over the weekend are back and fading this rally.
Bond yields in Europe, which were higher yesterday, are even higher today. Italian 5 year bond yields have moved from 5.06% on Friday out to 5.16% today. German 5 year bonds, which were weaker yesterday as part of the "risk on" trade are actually rebounding today, demonstrating that their is some fear in the market.
The correlation between assets class continues to remain close to 1 (or -1). The only thing about correlation that is worth mentioning is that on down days, the TV is filled with people lamenting the correlation and how everything moves together, but on the up days, everyone talks about specific stocks and no one really bothers to point out it is just the same trade as the day before, but in the other direction.
Europe is busily working on plans to save the world. I hope they hire some useful advisors. Somehow I doubt it, because although the problems are credit market related, they seem much more comfortable getting advice from investment bankers, Bund traders, FX traders, and even some stock guys. If a credit trader tries to tell a trader from another market what they could do to "fix" their market, what trades should be done to push a market to a certain level, they look at us like we are cross eyed geeks with drool dribbling down our chin (I saw enough of those looks in high school, that I'm good at recognizing it). If they deign to respond at all, they quickly poke holes in the argument and show how quickly their market would figure out the manipulation and how little lasting impact would be achieved. But, if they have a plan to "fix the CDS market" they still look at credit traders as though we should go into our little corner. I have an issue with that. Too many people who know nothing about structured products, bonds, CDS, defaults, restructuring, have been involved in the prior plans. That is part of the reason they don't work. Someone needs to be in these meetings providing a dose of reality. Explaining how something really would work, not what some I-Banker says should work. The meetings might be more acrimonious, but the outcome is a plan that may actually work.
In the end, I expect that we will get more of the same. More announcements that make the markets go higher initially. The further the market is away from the core problem, the more pronounced the rally will be, as it will take longer to figure out, that once again the solution won't work. And every time I get worried that I'm too bearish, or that the market is too bearish, I just need to listen to a couple of famous commentators foaming at the mouth how great of a buying opportunity this is, to realize that there are people just as bullish, and primarily are bullish on catch-phrases like "Europe Gets It" and "2008 is off the table". It is too much to hope Slovakia says no, but regardless of the outcome of the vote, it is important to note that any new and improved solution is likely to be pretty much just France and Germany sucking it up and hoping it's enough for the PIIGS and banks, without being too much for their own debt issuance needs.
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More no volume rocket days....
its all about positions Pete, leveraged hot money versus the CBs- who has the edge?
Yes, and it ain't rocket science. The big boys are running stops. This crap will continue until there are some perp walks.
Insanity every day is a pretty good bet.......which confirms that the markets are completely broken and being used for nothing but a gambling venue.
Gambling indeed. I'm losing my shorts on shorts. When will it end?
Go to Cash. Boycott Stocks and Wait. Short Covering Rallies eventually Fail.
Peter, love your droll sense of humor. Bears will eventually get their revenge but in the meantime, it's been painful.
Wait, doesn't the chairsatan know what bond prices should be? Why do we need a market?
We need a market for people who are too smart to play the lottery to dream about becoming somebody and thereby take their minds off of the reality that they are nothing in a society that doesn't care about the little nothings.
dup
It is not about the EU or the Euro it is about the big guys getting their cut! No matter how, from where and who in the end will pay for it, or not!
Many EU rules have been deliberatelly broken since the "crisis" started and they wont stop now! Since there is at least for now no more moeny to go around, the shorts are getting obliterated by hte HFTs and algos alike! And this until they get the big one, either form the ECB or the IMF or the FED or all three at once!
Until then, this "market" will drift higher on little to no volume followed by a big drop, engineered of course, like anythign else was/is, only to rip higer for the year end bonuses!
I closed all my shorts just in time, didnt made a lot but was still worth while the risk, now am o the sidelines and will stay there!
There are no rules, theyre just ensuring everyone is positioned for the 1 world govt takedown. It will be soon.
Global Columbus Day! Let's discover...what's not going on!
Bad, Europe. Bad. No biscuit.
Being a bear, you must learn to take your money quickly, otherwise you could get run over by these horrific squeezes.
Actually, it is easier to make money on the long side during bear markets, since these rallies are so ferocious.
'Ferocious rally' to DOW 11,300? Big deal, hell you went all-in long at DOW 12,700. Hows that masterplan workin out, lectureboy? Always talking from on-high, like you know something, while your announced trades are the worst around.
Judd Gregg, Republican a Goldman Sachs advisor, on CNBC telling us the Occupy Wall Street Crowd is wrong.
Don't Buy Stocks. Support the Occupy Wall Street Crowd.
When the Financial Crisis blows up the market do you really want to own stocks. And it will.
You don't mean Judd Gregg, former Senator from the state of New Hampshire and former member of the senate banking committee, do you? The guy who gave up his office even though he could have easily won re-election, not that guy?
Gee, wonder how he ever got a job with Goldman Sachs in this economy? (sarc off)
Merging into traffic, you must accelerate quickly, otherwise you could get into an accident.
Actually, it is easier to avoid merging and utilize an intersection with a stop sign or stop light.
Really? Fade a rally based on Europe opening the door to giving the banks free unlimited money. Have fun with that TRADE. You will get as mauled as the fools who decided shorting after TARP was announced in the USA was still a good idea.
'Free money'? You still believe in that? No one else does...all the free imaginary money possible has already been priced in. This is now a fools game, getting you to believe in and bet on utter insanity. Have fun with THAT trade!
And some morning soon when youre slung upside down in a -10% open, I'll laugh at anyone crying about how they got 'ripped off so unfairly' playing with criminals in an imaginary rigged game! Trade THAT!
Everything that was put into place to stop the dump in 2008 is still in place. You can't have a selloff without a banking panic. You can't have a banking panic with 0% unlimited loans for banks and multiple bailout programs.
I'm not saying I like it. I am just saying what it is.
Youre not saying what it is at all.
Youre looking for normal market behaviour? I cant believe how everyone still misses the big picture....this is NOT about 'free money for banks' as you and others now think is 'the plan'...LMAO its about a coordinated takedown of the western world into 1 currency.
And that money will be "backed" by gold. And the price of that gold will be determined by those who decide how much of it backs the new money.
We already have one world currency. You just missed the transition. As long as all central bankers cooperate to manage FOREX exchange rates, and they all are printing to parity, there is only one world currency. It is and endless stream of digits and paper.
Judd Gregg a Republican Goldman Sachs advisor said the Tarp that he voted for saved the market.
Faber asked what would have happened if they let the bad banks fail.
Judd Gregg said you would have played with fire. Hmmmm.
The same guy who voted against the plan to save America's Credit Rating.
Let me get this straight.
Judd Gregg Says Bailing out Goldman Sachs is a good thing. But Fuck America's Credit Rating. Just so Goldman wins.
I guess that's how advisors are paid back.
Boycott the Stock Market. Don't Buy Stocks. Support Occupy Wall Street. And Fuck You Judd Gregg and Goldman Sachs.
Note: Goldman Sachs is a Ruler of the World Company who votes against it's own clients.
huh? TARP was signed into law on 10/3/08. The S&P fell another 38% until it bottomed 03/09/09 due to QE1 and the suspension of Mark to Market.
I'd say fading TARP was a success for those who went short...
I can re-assure you that while you're re-assured that shit fell apart after 10-3/08 it won't happen in U.S. markets this time...because, first, this is a Europe bankiing problem and as they begin to print it takes away the counter-party risk of U.S. banks, second, and more importantly, thre is no way Ben and the Inkjects let this market fall any further than 20% from here.....
Shorting is the ultimate suckers bet.
i was merely pointing out the issues with saying Shorts were mauled after tarp. they clearly were not. Nowhere did i say whether i believed that would happen again, nor did intimate my leanings. I am neutral to bearish on the economy, but i dont really care what the market does. The econ =/= the market.
I trade volatility, i dont care about the destination as much as the journey.
You have clearly shown your bias, i wish you luck with that. while this rally has been great, it wont last. I will be positioned to take advantage of that fall, then I will try to position for any subsequent rally. Rinse/repeat.
You call a 100% loss a victory? Yes. Lets pretend the shorts are still not crying over being wrong for 2 years. You can't swing a dead cat without hitting some cry baby short from 2008.
All that matters is the money being piped into banks. That is the way it has always been.
But do go on about how stocks didn't rally in the following March when they finally announced TARP would be used to buy toxic assets. Pretend the application of the funds was not what I was talking about.
I laugh at you people who dont even realize youre now under full Stockholm Syndrome...this is really pathetic. Youre the enablers.
Do you even realize how much money they are printing? 1 trillion dollars is 1 million x 1 million. I am not enabling shit. I am scared shitless of holding paper money. I know the markets are all rigged. The people that want stocks higher in fiat dollars have GD printing presses!
you need to brush up on your history. The toxic asset purchase using TARP was the initial thought, they scrapped that for what they actually did do after passing it.
shorts who were still short after the announcement of QE1 and suspension of mark to market were fucking idiots to stay short. I was not short. That was the game changer, not TARP. And by game changer i mean for the market, not actually fixing anything.
I agree, Pete has a terrible track record on trading calls. It was all so obvious as pointed out by many ZH posters: near record NYSE short interest, at March 2009 levels anyway, only meant a ferorious rally would blow the shit out of shorts. One of the largest rallies in history occured when everyone was lining up short--it has and is happening yet again.
I can't say this enough, no matter how drilled down these trader guys get, THE MARKET WILL NOT CRASH WHEN EVERYONE THINKS ITS GOING TO CRASH.
There isn't a person alive that is truly not scared to go long (incentive bias from mony managers while they jaw-bone the viewers don't count). Which means there is not a person truly alive that thinks the market isn't ready to crash and burn in the great tundra.
Which gets me back to the point, the market is going to rally. It's going to head the year higher whether you like it or not. Almost every major asset class is up: Gold, Silver, Uitilities, soon to be SPX, DOW, QQQ--despite all the yelling and gnashing of the teeth.
The market doesn't crash unitl Oblama loses, Bernanke gets kicked out, money printing and Fed goosing ends, yields become a true discovery mechanism again, and the markets get back to being "free." We're a long way from there gentleman.
My long term stance: everyone short must first be fucked silly, then longs, then the 50% that don't own shit. Right now, we're in the first stage. After the second stage, longs getting murdered, then the botoom 50% will lose every entitlement check that have kept them going. And that's when the Global Story ends folks. Short at your own fucking peril as you feed the Wall Street casino. Good job.....keep the beast going if that's what you want.
The market always moves against a trade crowded by retail and their momo chasing representatives.
The house has trained the players for three years to do exactly what it wants in its casino. Everyone else gets killed.
The stock market liked something right before 10AM and by that i mean the Algos because the turnaround was based on lower volume than the initial drop.
I truly believe the world has decided that they need to kick the can far enough to last 25 years. All the aging boomers want to live in luxury until they die and then it's their kids problem to clean it up. The majority of the boomer generation doesn't care about anything beyond themselves.
The problems won't be fixed and sky high equity values don't mean a thing to the younger generations because we don't have money to invest. I laugh every time I see a country club. After the boomer money is gonewhere will they get members? What 35 year old with a family has enough money to belong to a country club outside a few doctors and lawyers?
Can you actually picture a country run by the OWS crowd?
We needed the collapse to begin long ago while the boomer generation would have cared enough to rebuild. Now we have this 60 is the new 20 bullshit where the boomers want the next 25 years to be an endless party for them so they can die happy. While they are happy their kids are miserable and they blame us for not working hard enough to get a job.
The younger generations are left with a cadaver, a festering rotting corpse of a world. But what do the boomers care they'll be dead and won't have to wory about it.
http://www.youtube.com/watch?v=zN6MxLYB8hM
You truly believe the world has decided to just keep doing this for another 25 years? Oh wow, you guys really dont get it at all. Pull back your 50,000X electron microscope view of things and try to get a glimpse of the big picture before youre all road kill.
If we were on a gold standard, I would agree with the market dump theory. But we aren't. They can keep doing this for another 25 years, just like the last 40.
Party on, full-retard 'merica.
Your thesis is interesting, and frankly, one possible outcome. I would make one observation regarding the OWS crowd, however. They are the children and grandchildren of these very same permissive, self-important Boomers: many, infused with the very same trickle-down sense of entitlement and self.
I recall an article which I read several years ago in a German publication, which spoke of the American Boomer generation and its effect upon the world economy. The German word used to decribe this generation was "heuschrecken."
"Locusts."
More people with time to spend reading ZH shortly:
On Wall Street - "10,000 jobs could be cut by the end of next year, bringing the total losses on Wall Street to 32,000 since 2008":
http://finance.yahoo.com/news/Wall-Street-Could-Face-10000-nytimes-464334473.html;_ylt=AurkV6pBiDu7VIZyNM1rrs27YWsA;_ylu=X3oDMTE1ZnRpNjYyBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawN3YWxsc3RyZWV0Y28-?x=0&sec=topStories&pos=1&asset=&ccode=
Rock and Roll all night and party every day -Equities traders union
This has to be hands down one of the most blistering bear-killing rallies of all time.
Just look at the huge runs off the lows in oils like CVX, NOV, COP, etc.
And blue chips like IBM.
And don't get me started on the junk bonds like JNK, HYG, etc.
Nothing compared to your rectum-wrecking market plunge right when you went all-in long at DOW 12,700.
This has to be hands down one of the nicest days in Chicago this year.
Just look at how blue the sky is.
And comfortable.
And don't get me started on the fall colors.
CVX has been bouncing between 90 and 100 since the end of July. LMAO
RearViewTrader is very selective in his chart timeline views and calls...convenient for him too that he can negate trades such as his 'peak arrogance' days when he was telling everyone they better pile in long fully margined at DOW 12,700 for the huge rally....wow cant make this stuff up!
We'd better not tell him about the broadening top forming on the SnP.
man, much as i like mr. market, i hope we get that subsitute teacher again, today!
And again today.
Someone in America has clearly set the FTSE at 5400 on their systems.
Can't short yet. Wait for the spike after Slovakia gets paid. Sit. On. Hands.