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Europe Closes With Equities Outperforming Credit And Financials Weakest
While attempting to assign news/rumor to each dip and rip in today's market is a waste, we note that while markets ended considerably higher (from both yesterday's close and intraday lows), there was some less-than-compelling evidence that traders remain unconvinced. Another referendum-on / referendum-off day saw equities very notably outperform credit markets, it was investment grade credit that outperformed as financial credit lagged the rest of the market. Combine that with the strength in gold and perhaps there was a little more safe-haven demand than a rip-snorting 40pt rally in ES would suggest. The EUR action dominated FX markets (as JPY stagnated) as vol was aggressively bid up around the open (much more so in macro protection than micro) but has ebbed lower as the day has worn on. US equities remain notably expensive relative to broad risk assets, especially noteworthy given the convergence to 'fair-value' overnight from an expensive close last night.
Equities in Europe stayed well ahead of credit all day - after lagging a little yesterday - but the strength in IG (as opposed to higher beta XOver or SUB financials) suggests much less confidence in this move than some would believe. Both Main and XOver (the investment grade and higher yield credit indices in Europe) saw the index hugely outperform intrinsics (the move in the index was much larger than what the underlying components would suggest) and while financials did improve, the move in single-names was very modest. Interestingly FINSUB is right at fair-value while FINSEN is 8bps tight to fair-value and both Main and XOver (and IG) appear notably rich to fair-value here once again.
We noted last night how stocks had closed very significantly ahead of TSYs, the USD, and credit. More specifically we noted, that broad risk-assets had not enjoyed the late day excitement in stocks. Overnight, as the chart above shows, we saw ES drop precipitously and get very close to CONTEXTual fair-value before the rumors and news started to break this morning. Evidently, equities' rally today dragged risk higher but not as much as we would expect.
Sovereign credit markets improved with CDS outperforming bonds as EFSF bonds managed only a small gain and the much-watched BTPs managed to compress their spread though only a little. Most importantly, given the news out of Greece, there was some very serious movements in the CDS-Cash basis. GGBs deteriorated on the day with 1Y poking its head over 250% yield intraday and 5Y 254bps higher in spread to Bunds. It was the CDS-Cash basis that crushed - as we revert to no trigger voluntary event as the basis has moved from +19bps (almost perfectly priced on Tuesday) to -650bps today!! (bonds trade 650bps wider than CDS compared to Bunds/Germany!). Portugal also has started to see its basis move notably negative (bonds underperforming CDS) - which just confirms the unintended consequence of de-flowering the CDS market and a real-money market looking for exits.
Finally, given the dollar's weakness today, its perhaps no surprise that commeodties are improving but oil and gold appear to have tightly coupled this week (as has copper and silver interestingly) with the former pair up over 1% on the week and the latter down 2-3% still. Gold holding above 1760 - at its highest since 9/22, almost retracing 61.8% of the September swing high to low.
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Europe is more important than democracy and freedom. Back to work, Greek slave!
Does ZH really want to align themselves with these losers and misfits from OWS New York Chapter?
This is what I saw in Zuccotti park
http://s2.photobucket.com/albums/y33/PARSES6/
Sweet, a government troll. Yeah sure, go ahead and provide the password for your album there chief.
What a surprise, clueless economist with albino girlfriend (what happened to ugly photo) and pretends racist is government or BIG MEDIA troll!
Try attacking the photos...they don't lie.
yeah, because we all know that our gov would never stage a photo... /s
I loathe the Government
The OWS is the government. Quite an amazing strategy by the ruling party, rig the market to fail, than protest against those that you put enormous pressure on to fail the system. If any of the OWS people had any ounce of brains they would be protesting the real decision makers and the real movers of the economy, the policy makers in Washington. The nonsense that we've had any type of free market based economy is incredibly ignorant. The OWS is a complete sham.
Troll day on ZH!! BRing it! Or is it fear Ron Paul day. Just read article on National Review of all Ron Paul supporters at OWS.
Instead of a pawnbroker, please go for Bernanke.
your name says it all!
wtf does that have to do with the subject being discussed here?
+200. Welcome to the Truman show. The Matrix. In all seriousness, I have faith that the collective human spirit's gag reflex will soon be triggered and we will reject the fantasy world being constructed around us. Cozy as the TPTB illusion is, something intrinsic to our composition demands reality, even at the expense of creature comforts. I'd rather be broke, hungry, and fighting for my life than continue existing inside this charade.
i second that. and I know that there is much more than economics at stake now in this world.
Ponzi continuum 101.
Where is the collapse?? LMAO!!!!
Zerohedge perfect contrarian play.
DOW, Small caps all rallying strong. ECB cutting rates, with more cuts coming....China next, huge boom in global growth coming.....commodities selling off since May, huge boost to disposable income....all is bullish.
It all works until it doesn't.
http://www.youtube.com/watch?v=TmM3KQnFmXs
exactly. can preach fire and brimstones all day, every day. meanwhile, back in reality, money invested is actually growing as opposed to those who "fade this stupid rally" or believe it's "the mother of all short squeezes"
right, with all the great positive economic news out there the market can only go up... naturally and without the FED carrying it perpetually...
If you believe that, then I've got a great investment opportunity for you. Get in on the ground floor, and who knows where it can take you. Send me a private message for more information on a valuable investment opportunity in the San Sebastian Mines.
San Sebastian is a county of Puerto Rico, no such mines over there.
ten year chart?
Isn't it amazing how the momentum chasing scum come out from under their rocks when their pump up on rumours is in play, but they are no where to be found when the light of truth and reality is shing brightly like the recent high volume cliffdives. MoMo and Goldmanite = Ping and Pong.
perhaps another liquidity driven boom in financial risk assets, but certainly no real global growth, which there hasn't been any in over a decade if you account for inflation properly. Have fun trading it on the long side. If you are smart enough to figure out when to get out of the trade, we salute you. In the mean time, my suggestion is the S&P won't come close to its old nominal highs, let alone its real highs (or gold denominated, i.e., hard money, highs) for a generation. Hope you haven't been waiting the 13 years since the last one.
@Gm
Thou shalt not take my name in vain
You miserable troll, you just witnessed the worst orchestrated political rape go down without as much as an eyelid fluttering, and you wonder how the matrix manipulates the markets? How it lies to achieve its ends? Another fake FED/HEDGE/SHORT RALLY spun on the basis a null referendum that makes no difference anyway, and you praise that shit?!
But don't worry, this circus is just delay. the entire effin Euro system is insolvent, and there's no cure for that in the long run.
All you guys that trade in this confusing market have Duke Nukem grade Balls of Steel. I salute you and wish you well.
Oil needs to get over $100; economy will really do wonders then!
It will...and it's rising fast baby!
$200 a barrel here we come once it breaks $110 between WTI and Brent. Then that will be all she wrote.
Hope those idiots print faster personally, snap some people still wandering around in a stupor into the current situation.
Here is the entertaining for all
http://www.businessinsider.com/bank-of-america-foreclosure-texas-hurricane-ike-2011-11
FIASCO: Bank Of America Forecloses On A Home That Doesn't Even Exist
Read more: http://www.businessinsider.com/bank-of-america-foreclosure-texas-hurricane-ike-2011-11#ixzz1cfHdmOZy
nice of you to offer up some levity at BACs expense, but businessinsider is a piece of shlt website and bastard child of huffpo
agree, but even criminals sometimes have to tell the truth
Greek slaves! You will work in the salt mines for us! We will shave you women and then make them ours!
unless of course you do the only right thing and stop all efforts to cut you down.
say no to the euro!
follow argentina in what they did
i feel for you, defend yourself, make yourself heard!
only you can build your future, no european government!!!
Here's what I'm excited about.
Let's say the S&P gets up to new highs, for shits and giggles. Say, around 1666, for the sake of devilish symetry.
Where do you think that puts gasoline? About 40% higher, at least, to about $5.00/gallon. That will do wonders for the Holiday Season, won't it?
How about food and other necessities? Bread @ $5.00, anybody? How about eggs? Is your peanut butter not expensive enough?
How about Miracle Whip, the largest container of which is ALREADY over $5.00.
And don't even get me started on poppers and lube. A good, healthy sex life ain't cheap, ya know?
I see a Taliban member must not have taken too kindly to my final sentence.
Aww, poor widdle social conservative. Life ain't been fair to you, huh, sweetie?
Right, it's all inflation. Higher stock market is fake rally when dollar goes lower.
Sec...
I'm getting $167.97 per barrel in a year with the inflation indicator known as S&P @ 1666 against the current $94 per barrel on WTI with a weekly 1% cost increase per barrel.
That works out to whatever you are paying per gallon as a 56% increase. So using Northern NY as a point of reference on here. Cheapest deal today is $3.45 (http://www.newyorkstategasprices.com/Watertown/index.aspx)
Currently: Cheapest is $3.45 per Gallon as of Nov 3rd 2011. Nov 3rd 2012: $5.32
Not bothering to calculate in the long weekends into it. So to fill a Toyota echo, smallest tank on the market that would be 11.9 gallon tank. 63.30 to drive 380 miles on a single tank.
And depending on your state, there may or may not be taxes owing on that. :-\
So, if the US cuts interest rates, the USD gets hammered. If Europe cuts rates, then it's good for the EUR and bad for USD - EUR up today. Huh?
Europe cut interest rates because the economy is not doing well and expects a recession. Bernank says that the economy remains weak. So, Crude is up on this news? Huh again?
No resolution on Europe (in fact seems to be getting worse). Weakening economy. etc. etc. It's 2009-2011 all over again - just close your eyes and buy - it makes no sense at all but the market just wants to ignore everything and go up...
Bears not getting the job done.
Any positive new out of Europe or a collapse in credit spreads..
Will spark a rally that will set your hair on fire.
Nothing but distribution going on
How's that NFLX treating ya MoMo?
Better yet, AFT
He won't answer...that requires thought with minimal executive functions.
Feel free to add your disclosure that you work for one of these sorry Wall Street firms that our taxpayer dollars is proppin' up (through involuntary means)..
the bears?
what the hell can anybody do but watch the clown shows?
and follow zH, of course!
"[THE BAILOUT] will give us a huge Marshall Plan-type of aid for investment," said Yannous Papantoniou, former Greek Defense and Finance Minister. He emphasized the plan will lessen the effects of the austerity measures, and so doing will remove the pressure on "the people who protest now." Meanwhile, the Greek Parliament was under close guard as protesters gathered in the streets surrounding the Parliament's fortified downtown tower, a modern-day Keep. An early BBC report said Parliament was in its secured station within the building as Prime Minister Papandreou meets with Greek President Karolos Papoulias.
As everyone no doubt recalls, the Marshall Plan is the best, most noteworthy icon of "The Pottery Barn" mentality. We broke it, so we bought it. Sure, we tore through Europe like Berlusconi tears through hymens, so why not help them rebuild? In my humble opinion, no politician should be comparing the outright wanton destruction of an entire region of the world to the blatant theft of a nation. Continued enslavement is not what the man on the street wants!
had a look at some of the dogs of August GM etc .. but RIMM at 18 and change , how's that hockey team working out for ya Ballsie?
Psycho Sarko stirs the pot: BBC live updates:
1732:French President Nicolas Sarkozy says "we will not meddle" in Greek politics, but "we must defend Europe and the eurozone".
1726:"If the euro explodes, Europe will explode," President Sarkozy tells a press conference at the G20 in Cannes.
As if people street level give a shit about bad business decisions of the wealthy inbred n'th generation euro trash.
The rich people can blow up if they want, just stay the hell away from the rest of us.
THE GREAT IRS HOAX: WHY WE DON'T OWE INCOME TAX
http://www.famguardian.org/Publications/GreatIRSHoax/GreatIRSHoax.htm
Watch the movie here:
http://www.famguardian.org/Media/HowToKeep/movie.htm
Welcome to our free download page. The Great IRS Hoax: Why We Don't Owe Income Tax is a an amazing documentary that exposes the deception that misguided or malicious "public servants" have foisted upon us all these years:
"That we are liable for IRC Subtitle A income tax as American Nationals domiciled in the 50 states of the Union with earnings from within the 50 states of the Union that does not originate from the government and is not connected with the "trade or business" franchise."
Through a detailed and very thorough analysis of both enacted law and IRS behavior unrefuted by any of the 100,000 people who have downloaded the book, including present and former (after they learn the truth!) employees of the Treasury and IRS, The Great IRS Hoax reveals why Subtitle A of the Internal Revenue Code is private law/special law that one only becomes subject to by consensually engaging in an excise taxable activity called a "trade or business", which is a defined as a "public office" in the U.S. government. It proves using the government's own statutes and publications and court rulings that for everyone domiciled in states of the Union who has not availed themselves of this excise taxable franchise/privilege of federal office, Subtitle A of the I.R.C. creates no force of obligation upon them to pay an income tax to the federal government. The book also explains how Social Security is the de facto mechanism by which "taxpayers" are recruited, and that the program is illegally administered and misrepresented in order to illegally expand federal jurisdiction into the states using private law.
The Great IRS Hoax book does not challenge or criticize the constitutionality of any part of the Internal Revenue Code nor any state revenue code, but simply proves that these codes are being willfully misrepresented and illegally enforced by the IRS and state revenue agencies against persons who are not their proper subject. This willful misrepresentation and illegal enforcement is effected primarily through the abuse of words of art and presumption to deceive the hearer and violate due process of law. The deception is effected for financial reasons by those who benefit personally from the FRAUD. This FRAUD is further summarized in the following documents useful during litigation as memorandums of law:
http://www.famguardian.org/Publications/GreatIRSHoax/GreatIRSHoax.htm
It doesn't matter how great you think your case is, they still throw you in jail if you don't pay the taxes, so it's a moot point. Just ask Irwin Schiff.
We are in the clear now!! Buy Buy Buy!
Wonder what will happen to markets when burnank lowers rates to negative numbers where the FED pays the TFUTC (toofuckeduptocomprehend) an interest rate to borrow...
BBC:
1744:Greek media are reporting that the Syntagma and Evangelismos metro stations closed this evening on the orders of the police, who said they wished to prevent "incidents". We'll bring you more on that as we get it.
Is it possible strong equities and weak credit mean the inflation trade is turning back on?
my sincere congratulations to anyone daytrading this casino with even modest success -- you must be making a killing when /ES is routinely undergoing 30 point intraday swings. as to whether that's indicative of a remotely healthy market that's not on the verge of implosion, well.....
I actually made money yesterday trading TVIX. Just watch the DJI hover on resistance and support lines. I was able to guess the direction correctly for once. If DJI breaks below 12,000 this afternoon I'll make a couple bucks. Although at the moment not loking good.
Hi Tyler from who or where is this context model???
TEST