ES Opens -1% As Oil, Gold, And FX Carry Leak Lower

Tyler Durden's picture

While EURUSD had managed to clamber back into the green from a modest 25pip drop (bouncing off 1.3500), carry crosses (most specifically AUDJPY) are ebbing lower and Oil and Gold's soft opening is dragging equity futures to a dismal start. ES opened -13pts (around 1%), below its 50DMA (first time since 10/10) and at its lowest in over a month. With TSYs not open yet, ES is mildly lower than CONTEXT but we would expect the implicit shift in 2s10s30s to sync up with equity derisking.

UPDATE: ES 1201 seemed to spur some serious volume for the overnight session.


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Captain Benny's picture

Glad I have a few hundred calls on SDS :)

Its "transitory" that I'm exiting the paper market and acquiring physical... definately won't last forever, right?

The Fonz's picture

I too strapped on my brass balls and held my SDS options over the weekend. I am gettign that tingly feeling in my toes just like when the roller coaster starts down that first big drop. Good times.

DeadFred's picture

So can anybody who's good at the technicals say where the support levels are? I'm not great at this but I don't see anything but Fibonaccis for a long way down.

qqqqtrader's picture

one of the ones I trust for market direction...

nobody can call it right all of the time but AT seems to be on the right side of the fence most of the time.

The Fonz's picture

next support in S&P would be somewhere around 1115ish, and breaking through 1100, would be bearish. However I would guess that the move will take a break around 1100, either just above or below it unless things really crash.  I don't think we are going to spend much more time around the 1200 level, but it might be possible for it to go back up to 1200 on light volume perhaps, then reverse.  If the ECB steps up and prints all of this goes right out the window.


No debt reduction and gold tanks on the open.  Yeah, that makes sense. 

WestVillageIdiot's picture

Day to day movements now seem to be nothing but a loud noise.  This sure feels like batten down the hatch times.  Do the things you need to do and then try to feel comfortable.  Even that might not save you but it increases your odds. 

Darth..Putter's picture

That paper price should be more firm?

MFL8240's picture

Wrong!  Think in reverse if you want to understand this Ponzi scheme.

topcallingtroll's picture

Europe is a more immediate concern and all signs point to deflation.

Spitzer's picture

Thats bullshit

The Euro is its own bloc. If deflation was to exist then the Euro would rise. No debtor natons currency has risen in value as its economy imploded.

philipat's picture

Gold is being manipulated again by CB's via PD' the thin volumes of the overnight trade, where there is more bang for their fiat buck. Imagine if the demand for Dollars were to collapse and the Chinese instead store reserves in Gold?

Incidentally, not that I am a fan of the Euro, but 1.35 is actually at PPP.

MFL8240's picture

The whole country makes no sense.  Paper Gold is liquidating because no one wants Gold, they want paper US dollars. lol!!

RobotTrader's picture

Looks like the record-breaking run in U.S. Treasuries is going to continue.

The "Mad Panic" into bonds is getting pretty crazy.

Dr Paul Krugman's picture

The demand will stay because the U.S. is the strongest country in the world.  Europe should take a hint from the U.S. and fund their banks.  If they did, it would mean politicians could focus on unemployment instead of fiscal policy, which they know nothing about.  All the talk of austerity is crazy in this environment of mild inflation.

BrocilyBeef's picture

Sorry, Paul, I'm not going to listen to your advice again until you at least start picking your dog's crap up off my lawn.


And have a nice jog.


BrocilyBeef's picture

I like cats too!


Anyway, what happens "hypothetically speaking" if/when we aren't the strongest in the world?

I would assume the dynamics change a lot.

Is the United States Federal Reserve Note still have perceived value?

Do we still stand free of corruption?

Are strong in defense or do we lash out like a child?

Are we monetarily conservative or do we spend other people's money?

Are we still the free?



Dr Paul Krugman's picture

We will be free as long as Republicans do not cut spending.  If we cut spending then we will have no defense, no jobs, nothing.  As far as corruption goes, politicians will sell their books.  This is why politicians should stay out of monetary and fiscal policy.  This is why the Federal Reserve, and other central banks like the ECB, should do the right thing and generate more spending by printing more money.

And the note will always have value.  What will replace it?  The renminbi?

BrocilyBeef's picture

Okay, stop... not funny, this is just disinformation now.

DosZap's picture

Dr Paul Krugman

Here we go again, we are SO in Debt, we need to spend more, so we owe more debt, to get us out of debt.

Sounds just like an Obama Cabinet Member.

No defense?.

Your shitting me?, we do not need to have  one soldier off the mainland to destroy the world 1000x's over, but we cant defend ourselves?.

We are a nation of 300 million plus ( over 80 million) weapons owners, and we are packing heat by the millions, and we know how to usethem IN A BIG way,but we cannot protect ourselves?????.

Left wing liberal horseshit if ever I read it.

Dr Paul Krugman's picture

I think we could reduce military spending, but not overnight.  Bush got us into the wars overseas, and Obama is getting us out, albeit slowly, but he is.  If we pulled out at once it could destabolize the middle east and worsen the problem.

We are in debt but think about the percentage of debt to the additional debt.  We need to increase spending, and what better way to do that than by issuing some dollars that we can use to rebuild ourselves?  Spending one trillion dollars at this point is nothing, and if we had spent more in the first place, then we would not be in this situation.  We would have lower unemployment because we would have created more jobs.

Race Car Driver's picture

> Spending one trillion dollars at this point is nothing, and if we had spent more in

> the first place, then we would not be in this situation.

Somebody's fulla shit!

A Trillion anything is a whole shitload of something - so large, in fact, that you have to use something as small as seconds to grasp the enormity of a single Trillion - and we've racked up 15 of the fuckers with more on the way:

A million seconds is 13 days.
A billion seconds is 31 years.
A trillion seconds is 31,688 years.

A million minutes ago was – 1 year, 329 days, 10 hours and 40 minutes ago.
A billion minutes ago was just after the time of Christ.

A million hours ago was in 1885.
A billion hours ago man had not yet walked on earth.

A million dollars ago was five (5) seconds ago at the U.S. Treasury.
A billion dollars ago was late yesterday afternoon at the U.S. Treasury.

A trillion dollars is so large a number that only politicians
can use the term in conversation… probably because they
seldom think about what they are really saying. I’ve read that
mathematicians do not even use the term trillion!
Here is some perspective on TRILLION:

Trillion = 1,000,000,000,000.
Western civilization has not been around a trillion seconds.
One trillion seconds ago – 31,688 years – Neanderthals stalked the plains of Europe.


Consider that most folks only earn a few thousand d0llars a year... a number too small to be in the above example.

And... your trolling style sucks. It's not even humorous.

Stumpy's picture

Nice numbers. Now divide your time results by 7 billion.

Dr Paul Krugman's picture

Economics is a science of percentages.  Income has increased X amount, so spending has increased X amount, no big deal.  Increase spending by another few trillion, and in terms of the quadrillions of dollars, the percentage increase is miniscule.

Vagabond's picture

That game only works in a world where infinite growth is possible.  Quit snorting pixie dust.

Spitzer's picture

Keynesianism is economic wtchcraft.

If anything you said was right, then why did Paul Volker raise interest rates to SAVE the dollar in the 80's ?

Dr Paul Krugman's picture

Inflation is under 4% right now.  Why did Volcker raise rates?  Because inflation was much much higher then.

Spitzer's picture


nixon imposed price controls at........drum roll please... 4% inflation.


StychoKiller's picture

If we pulled out at once it could destabolize the middle east and worsen the problem.

MiddleEast stability?  Show it to me... Bwahahahaha!

JPM Hater001's picture

Million_Dollar_Bonus is that you?

you old dog you...messin with all the kids like the pedophile we all know you are...

disabledvet's picture

Yes. But you do not sound like Paul Krugman. Prove it to us by posting "die rebel scum!" three times while changing your avatar to an imperial storm trooper.

Dr Paul Krugman's picture

You are upset that my methods have been proven correct?

disabledvet's picture

I'm easier to convince if you say "if only you knew the power of the dark side." I never understood the whole "no I don't want to rule the galaxy as father and son" thing.

chump666's picture

Well you are good at creating volatility in the market, ensuring that bond spreads are dysfunctional on moral hazard expectations.  In summary Keynesian voodoo will doom us all, major point being that oil at 90+ should take out China/France and Germany...

The only economic theory that I follow is "Sh*t happens"

Dr Paul Krugman's picture

There would not be dysfunctional spreads if Europe nationalized their banking system!  Look at the U.S.  We bailed out the banks, and so our bond prices remain high.  We created demand, and so could Europe if they did the right thing and funded their debt obligations.

High oil prices are transitory.  Besides, the prices are high on new foreign demand from emerging markets, as well as increased demand in developed nations. 

chump666's picture

I see your point.  But you better hope that China/Asia still like their interest paid in a depreciating USD.  Otherwise the bonds will be junk and you'll get a steady, but persistent sell off - which is happening now. 

Re: the bond market being broken, well everyone is now reliant on the ECB to pump liquidity into the markets, narrow spreads etc.  Y'know 100% that inflation will follow very, very quickly.  The oil price is a very good hedge against the soon-to-be-pointless EUR and the USD.  Oil buying has started pre-winter, and on EUR hedges (bond market broke).

Also on Asia, that is the worry, they go into a major slowdown (China) all hedges will be taken out i.e commodities, what may be cyclical demand will become a bid-less market...a devastating wipe-out for the world.

Check the iron ore price.  China's 2008 stimulus 'program' is going to implode

The market needs a flush out and pain is part of that, as I have said, take the pain now then later (or it gets worst).  Be stronger for it.  

No one should be bailed out.

Dr Paul Krugman's picture

I will admit that China has been in the commodities market, so if they go out then what happens?  Prices fall.  So if China decreases demand, which it sounds lile you think will happen, then this is deflationary.  So Europe spends more money fixing their debt obligations, they strengthen their bond market, and this creates prosperity.  Then commodities find equilibrium.  I don't understand what is so hard about understanding this.

chump666's picture

Dude I just trade in the markets.  I see chaos, that's all. There will be no equilibrium.  Just the end of a liquidity/money printing cycle. Go to Europe, go to LA, NYC, Oakland all these protests are based on the idea that everyone got gamed with   the 'spending' i.e it's helped nothing except the major players.

The debt markets will collapse eventually once the sovereigns cannot raise funds.  We can see this right now with Euro bonds, EFSF fund etc. 

Dr Paul Krugman's picture

OWS is concerned with the fact that not enough was been done to help the middle class.  We could help the middle class if we taxed the rich and increased government spending.  The bond market is primarily the U.S. market, which is fine.  Europe is having difficulties, so they need to learn from us and nationalize their banks.

Spitzer's picture

You are clueless

The only reason the US debt market is strong is because the US freindly world (japan S Korea, oil states)is not ready to axe the US military yet. They are working on it though. They have no choice.  Still, its funny that the Fed ended up being the worlds largest holder of the debt just to fill in some cracks along the way.

It has less then nothing to do with fundamentals, spending or any bullshit that a keynesian can dream up.

Dr Paul Krugman's picture

The U.S. military is too strong to be "taken over".  The Federal Reserve is holding some debt, but all creditor nations have increased their debt holdings, because demand for U.S. debt has increased.

Spitzer's picture

The largest holder is "some" in your mind ? Its the largest holder ffs.

The Eurozone one quite large net creditor that is decreasing their US debt holdings. US debt is being used and abused as a place to sit and wait. That is why everyone is piling into the short end, closer to the exists.

There is zero funamental demand for US debt. Holding a 30 year at 3% or less while inflation is at 4% is not a very good business practice.

navy62802's picture

Oh God. ZH has been infected by a virus!!

Non Passaran's picture

Paul, you need to see the doctor!

Dr Paul Krugman's picture

No need to worry.  I am in good health.