This page has been archived and commenting is disabled.
EUR Decouples: The Other Way
As the Greek 'deal' is being finalized and we anxiously await next week's LTRO, it would appear that the market is now pricing in a very different way forward. EURUSD is soaring and decoupling (the other way) from risk assets as market participants begin to anticipate potential rate hikes in Europe to combat soaring energy prices, and furthermore that following the second LTRO, any and all easing expectations (and the pump to keep global asset prices afloat) will be squarely on the shoulders of the somewhat ambivalent Fed as the rest of the world already pumped about $2 trillion of cash into the market.
It does seem from credit underperformance in Europe, and financials underperforming more broadly, that the pump has run its course for now. It will be interesting to see how the Fed manufactures a reason to print with gas prices soaring, consumer confidence in the market economy so high, and high-yield credit near all-time low yields as their push-into-risky-assets play may have worked a little too well and a little too fast.
And the decoupling / recoupling has a long way to go (up for EUR or down for the S&P?):
Chart: Bloomberg
- 8080 reads
- Printer-friendly version
- Send to friend
- advertisements -




It's different this time!
Every time I see or hear that phrase ("It's different this time") I want to burst out laughing. I'm not sure if it's the phrase itself or the earnest look of (confirmation bias) passion and sincerity on the face of the speaker.
In fact.....they sort of look like your mug shot CH1. :>)
It is diferent this time. You have zero hedge. Occasional "slivers of truth" emerge here...only to be struck down by the Almighty Madness of Greed.
...and submerged by the waves of the endless seas of propaganda.
at the end, economics is a dismal science because people are not atoms, they have a will. and so they can be quite unpredictable, in the short and medium term (adapted from von Mises)
disabledvet are we still agreeing on disagreeing?
Economics has never been a science, and nothing inside today's economics has any link with science.
People have to remember in today's world, most things with 'science' attached to it, has nothing to do with real science. It just is attached, wrongfully, to give it legitimacy, it should never have, because none of it is actually based on scientific principles.
There is no such thing as social science. Behavior is not science, thus there has never been a behavioral scientist. Mathematics is not science. Statistical models are not science...so on and so forth.
I would say it's not a big deal, a minor overlook, but it actually is a big deal. Because way too many people, actually think this world is based on legitimate science. It isn't. Playing around with numbers is not a science.
So when people consent to things, with all the above mentioned (and all that isn't..which is far more than listed here), they see 'science' and think something is legitimate or real, when really it's akin to quack doctors telling people to buy snake oil because their 'science' tells them to. In other words, people are misinformed on what they are consenting to and are led astray into making the wrong decisions on anything these faux scientists promote.
People should also realize that almost everything labeled 'science' and taught at universities (that endures our youth to the tune of 1 trillion...so far) are gaining 'scientific' degrees which have nothing to do with science. Yet they go out there as useful idiots, quoting their 'science' with faith like determination, passing off bs sophistry as scientific fact, all the way to societal bankruptcy (fiscally, morally, intellectually).
Obviously this is taking it far past your post, but I felt for the audience it needed to be clarified in a big picture kind of way. A teachable moment, of what should and shouldn't be labeled 'science'.
Glass-Steagall (an economic rule that must return, and no it doesn't need a 'scientist' to explain it)
hehe... :)
All the retirees and fixed income investors haven't yet switched into riskier plays such as stocks ...but Benny has forced a lot of them with 0% interest forecast thru 2014. We're probably very close to a stock market correction which will really piss off those who switched into stocks at the high. It's a shame the republicans have no answer to defeat Obama because he is so vulnerable in November.
It's a shame the republicans have no answer to defeat Obama because he is so vulnerable in November.
Well, it wouldn't much matter if they did. Blue and Red talk differently but act the same in office.
Different? Yeah, like *this time* the rate hikes will be bullish for the slumping economies. Oh f*ck it, EVERYTHING is bullish.
See what I mean! "occasional sliver of truth"--right here by Mr. Sarcasto!
Oh f*ck it, EVERYTHING is bullish.
T-shirt time. Ball caps and butt floss too, bitchez!
Read a weekly forecast of Armada Markets 3 weeks ago. In it they said that short EURCHF and long USDJPY are the trades of this year. I was an idiot that I didn't pull the trigger.
here is very interesting read
Almost 400 former House staffers registered to lobby in last two years
http://sunlightfoundation.com/blog/2012/02/22/house-revolving-door/
Nothing to worry about here. Benny B. says energy prices aren't part of inflation. move along.....move along sheeple. SARC OFF.
The fed is locked in a box. The market anticipation won't allow the fed wat they want to do. The only solution is war.
"The only solution is war."
Solution to what?
For the fed to get out of the box. War in the short term will cause a deflationary shock and the dollar to strengthen as people pull out of risk assets. Not to mention it provides a good distraction for the masses. I'm not saying it's justified, I'm just saying that is the only path they have left.
Serves only as a distraction for a short time as you mention but it doesn't really get them out of any box.
Some risk assets would fall (equities) but commodities would skyrocket.
Just review history...anytime the bankers are stuck where theyre at like now, world war ensues. NOTHING better for in-trouble insolvent world banking elites than world war.
Agreed. Likely to happen but won't solve anything.
Bingo!
Funny how is always comes down to war.
Modern US wars have four purposes:
1) as money laundering for fresh printed money - it's QE off balance sheet
2) to distract from real problem ( see sart of WWII and bursting of MEFO bills bubble)
3) to limit freedom and rule of low in own country
4) to defend petrodollar
5) to decimate useless eaters ( defending mother Gaya over-exploitation and plastic )
ok since teh markets are great and the housing market has recovered /s
i thought Global QE is already priced in in the system, are we going to need a new QE Doc?
QE is already happening. Take a look at the fed's balance sheet.
Sigh!
Ironically funny or funnily ironic...
and for the euro, Morgan S annoced yesturday that they are short from 1.33
any1 is buying their bullshit? Are they trying to immitated GS?
Advise every1 go one direction and rape them the opposive way?
Obama will be running for re-election with $5 to $6 per gallon gas prices by July 4th (no matter how shitty the economy remains) unless someone removes the CNTL & PRINT buttons from The Bernank's computer/printer workstation.
(Petrol/Diesel will be 3.50 euros per liter in Europe soon...Go LTRO, Go!)
And then, Obama & Pelosireid will be blaming evil speculators for the harm that gas/diesel/heating oil/food/everythingFlation is doing to Americans as they pray the Dow can stay green, if just barely, trhough November.
The 'other' party, that is as equally worthless, trying to unseat Obama and the Dems, will dare not blame The Bernank for the massive inflation that 'doesn't exist' according to the CPI, however, since they are in bed with the debasers, just as Obama is.
Good luck, those whose fortunes are tied to the Fractional Reserve Fiat-Toilet Paper Debasers!
TIS you are a fucking ZH goldbarian terrorist...
if Obama is driving the market for his re-election, what about Romney, is he trying to fuck the market up so that he blames Obama for his poor policies?
I really like the "Chartist Tyler" who posts this daily feature. Keep it up.
I concur, show us all of the full frontal salicious details you can possibly dredge up from the muck and mire of the markets! :D
At this rate, Dow 17800 by election time..
Way to blow ur load just mths before an election... idiots
The more tweets saying Greece defaults seems to be having some effect.
Just sayin' ...
why not to increase margin to 100% on oil trades? i am sure big boys who takes the oil have enough money...
I doubt this EUR decoupling will last the day.
Not only will it last it will accelerate once the Fed heads start talking.
Yes, I'm all a'twitter with anticipation of the juicy sound bites I can only try to imagine will be forthcoming from the San Francisco Fed today.
-del- LOL, this is masterful, the FED should hire you!
I just too some profit from by udn purchse at 27.00
Weakening USD bad for S&P500? Think again. Just a few days ago (yesterday?) we were told by ZH that weak currency has supported SP - now, how can the re-weakening be bad for SP's margins and inflated revs?? And, weaker currency = easier monetary policy
Only way I can think of stronger EUR weaker USD is bad for stocks is that EZ can't stand stronger EUR.
IMO this is a myth. a weaker EUR better for exports? only temporarily. devaluation is helpful for the debt, but the advantages it gives for exports vanish quite quickly. and exports from the eurozone to the USA, while substantial, are not the big thing anymore.
the relationship between the EURUSD and the US Money Markets invested in EUR is IMO nowadays more important than the trade part
Define temporarily, 3 yrs.? It's not just exports from EZ to USA, but it's the competiveness of EZ companies globally (EZ vs. US companies in LatAm, CHN, India etc.).
EZ can't stand too much higher EUR now, not an easy maze, but anyway, weaker EUR is more beneficial for EZ than higher EUR right now.
Well Well, maybe both.
going short EUR is more and more interresting...
Just as point of order...ahem, ahem..."DIDN'T EUROPE JUST LOWER RATES." (this is what's called in familial/military circles as a "throat clearing exercise.")
Japanese pension fund looses 2.3 billion dollars.
http://online.wsj.com/article/SB10001424052970203918304577242023349153292.html?mod=e2tw
Corzine would be proud.
Am I going fucking nuts or am I missing something?
Europe's in the shit. Banking system bankrupt, unemployment at record highs, interest rates at 1%. The EU ealrier this week reduce 'growth' estimates (or would it suit the algos to say it along the lines of 'increase in contraction'?).The ECB is in the printing game for, what, let's say 2 trill? Oil and commodities going stratospheric on the back of said 2 trill.
And the Euro appreciates looking forward to higher interest rates???? Have people gone fucking insane? Higher interest rates would completely cripple the entire continent. Forget that energy prices would do the same thing.
Well, am I missing something here?
So far this looks like there's nothing fundamental behind this EURUSD move, pure momentum. EZ can not stand higher EUR and can't even talk about higher rates
As soon as any 0% rate gets raised anywhere this entire free money house of cards collapses.
The EUR/USD move is a gigantic short squeeze. It is not based on fundamentals but on short interest and the liquidity of the player that is perpetuating the squeeze.
To answer your question "Are you missing something? The answer is Nope!
Let's all go back to sleep!
Correct me if I'm wrong. If the ECB raises rates to offset higher energy costs, and the LTRO has a lighter takeup than expected. Would that not cause Sovereign spreads/rates to go parabolic again? This being the result of less liquidity available, coupled with the ECB rate increase.
the short squeeze before the drop......has short squeeze written all over it...
Exactly. I predict it drops at 1.36-1.38.
the problem is, everyone who can read a chart predicts that, so id be prepared for surprises. Just my 2c. time will tell
risk?
ruh-roh!
So many billiard balls and all the CB queues are skewed; just watch the screw balls come off the wall! Minnesota Fats Ben and Fast Eddie Draghi play for high stakes, in the mano à mano of currency war amongst seedy HFT pool sharks of financial hinterland, where no holds are barred. Watch the Hustle turn into epic tussle as to who can print faster than counter uber-Oligarch; as the crazy banksta cabal of lender/manager predators push to limits each toxic bet via surrogate HFs, upto their necks in CDS swaps. The electronic virtual-real bigbrother world frothily bubbles in a mega rumble where you can pocket the whole shooting match into deeply leveraged pockets, if the sovereigns or targeted corporates slip on the fast and furious gambling table of economic mayhem, in spiking oil price thrilla -winner take all political stakes- of hubristic hegemony play.
Zeus would be envious of these human shills; if only he could stop laughing from their mad never ending purple dreams.