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Europe Drops Dismally Amid Deja Vu

Tyler Durden's picture





 

Keeping it simple, Europe was a sloppy mess today. In an almost perfect copy of last week's sovereign, corporate, and financial credit market movements, today saw all of these assets plunge back near post-Non-Farm-Payroll lows. Equity markets, which had miraculously managed to regain those pre-NFP levels this morning after the Spanish auction knee-jerk, rapidly retraced and aside from some stick-save efforts from US markets and Lagarde, keeps the chaos-ball rolling with yet another multiple-sigma flip-flop. Ugly all around as it seems the reality check we discussed on the Spanish auction overnight was better received than the spin the Euro-Elite tried to put on it as we reinforce our view of the instability as the LTRO Stigma widens further to post LTRO1 wides as 10Y Spain approaches 6% yield and 425bps spread and Italian CDS over 440bps as 10Y yields break back above 5.5%.

European equities finally started to revert back to credit's reality once again as we note the rollercoaster ride that European credit markets have had in the last two weeks - interesting that we saw higher highs in stocks and lower highs in credit - we have a hunch which will be right this time...

In the same sense of deja vu, European sovereigns have oscillated this week in an almost perfect copy of last week ending back near their worst levels of the last two weeks (most specifically pivot securities in Italy and Spain). So, rally on a successful bill-auction (which is ridiculous anyway), then stabilize, then flush out short-term bears and then sell-off hard - oh well...

Yep, all fixed...

Fool me once, shame on you; fool me twice and I must be a long-only equity manager...

Charts: Bloomberg

 


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Thu, 04/19/2012 - 12:29 | Link to Comment sbenard
sbenard's picture

Thanks for being the lone voice in the wilderness of economic insanity!

Thu, 04/19/2012 - 12:42 | Link to Comment economics9698
economics9698's picture

Burn the mother fucker down and hang all the bankers and politicians.

Thu, 04/19/2012 - 15:34 | Link to Comment Zero Govt
Zero Govt's picture

Hard to achieve that

far more effective society pulls the plug on them by not paying taxes to Ponzi HQ (Govt)

watch a nation shortly thereafter re-set to freedom and the green shoots of economic recovery

Stop Paying Your Taxes Boys... then watch everything fall into place

Thu, 04/19/2012 - 12:34 | Link to Comment carbonmutant
carbonmutant's picture

France and Germany want to suspend the Shengen Agreement which allows for the free movement between most member states of the EU

Spain has announced the suspension of the Schengen Treaty and the re-establishing of frontier controls with France ahead of the European Central Bank meeting which is to be held in Barcelona on May 3.

http://www.typicallyspanish.com/news/publish/article_34419.shtml

Thu, 04/19/2012 - 12:43 | Link to Comment economics9698
economics9698's picture

1.  Inflation

2.  Deflation.

3. War.

4. Austerity.

Looks like it might be choice 3.

Thu, 04/19/2012 - 13:16 | Link to Comment carbonmutant
carbonmutant's picture

They say the change is necessary ‘to control the massive flow of immigrants’.

Update: Spain's Cadena SER radio station is reporting that the government has decided to suspend the Schengen open borders agreement. It fears violent protest groups from around Europe will converge on European Central Bank's board meeting in Barcelona May 3...

Thu, 04/19/2012 - 12:46 | Link to Comment xela2200
xela2200's picture

oh, I thought that you were offering a road map.

Thu, 04/19/2012 - 12:49 | Link to Comment disabledvet
disabledvet's picture

NOT THE SHENANIGAN TREATY!

Thu, 04/19/2012 - 12:41 | Link to Comment smb12321
smb12321's picture

The Slog reports that the UK tried to sneak through a bill in Parliament that would allow surveillance of ALL web activity.  It was noticed and quickly withdrawn.  This was probably for the purposes of preventing funds from leaving the UK.  Maybe Europe only seems like a pacifist, gentle playhouse when beneath the surface, the beast waits.

Thu, 04/19/2012 - 12:40 | Link to Comment EL INDIO
EL INDIO's picture

PMs had a rough rid too !

I’m afraid Gold is in a very bearish stance. We just got a death cross, the 50 DMA has moved below the 200 DMA, while the 100 DMA did so 3 weeks ago.

It seems we are entering a deflationary period if Gold does not stabilise here. If it keeps drifting lower, I recon we could have a serious Gold bulls panic.

It feels like there is a will to break investor’s belief in the PMs Bull market.

Like they say:

… You didn’t think it was going to be that easy did you …

… Did you think you wouldn’t be tested …

Thu, 04/19/2012 - 12:48 | Link to Comment xela2200
xela2200's picture

Really? Because I am amazed that we are still holding 1650 level.

Thu, 04/19/2012 - 12:55 | Link to Comment EL INDIO
EL INDIO's picture

Do you mean 1640 ?

Even 1650 is below the 200DMA and that is bad.

Thu, 04/19/2012 - 13:06 | Link to Comment Awakened Sheeple
Awakened Sheeple's picture

China doesn't give a shit about technicals.

Thu, 04/19/2012 - 13:50 | Link to Comment EL INDIO
EL INDIO's picture

China has deep pockets, do you ?

Thu, 04/19/2012 - 14:17 | Link to Comment theTribster
theTribster's picture

Expected, as money leaves Europe and comes here the PMs naturally go down. They will test their three year lows over the next couple / few months. We'll see a bottom in the summer sometime, load up at that point becuase from there it is likely ti hit all time highs before years end! Let's face it, they can't keep all these balls in the air much longer, I'm guessing the summer and early fall we see that everyone is going to fall apart. Obama will get elected (as if it mattered) and we will see the true beginning of the end by year's end.

1100 or 1500 is the question, what will be the bottom for Gold? By December Gold will be north of $2000 regardless of the actual bottom...

Thu, 04/19/2012 - 12:44 | Link to Comment bidaskspread
bidaskspread's picture

Fearonomics: Lie,Manipulate, print, repeat

Thu, 04/19/2012 - 15:36 | Link to Comment Zero Govt
Zero Govt's picture

..or wave your handbag on-air

Christine Lagardes new tactics, novel to say the least

Thu, 04/19/2012 - 12:45 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

"auction"?

Thu, 04/19/2012 - 13:09 | Link to Comment xcehn
xcehn's picture

Nice commentary on just how fragile the global economy is towards panic and why the PTB are consumed with their propaganda blitz:

"As you’ll read, according to Congressman Kanjorski, the first electronic bank run came within a few hours of collapsing the whole world economy. Get that? If this first electronic bank run had continued for just a few more hours, the entire global economy would have collapsed. So what happens if there’s a second electronic bank run, the public gets wind of it, and just 10% of the American people start pulling money out of their bank accounts? See my point? The first (stealthy) electronic bank run was probably caused by just a few hundred thousand depositors. What happens if just ten million depositors participate in the next electronic bank run? A: The global economy dies—and it dies that day....This is no freakin’ game. You can see why Congress is so desperate to protect the banks that they couldn’t care less about public opinion. Congress knows that just one more significant bank failure may be enough to trigger another electronic bank run of sufficient magnitude to destroy the U.S. and global economies. Congress knows that two, three or five more minor bank failures might form a sufficient “pattern” in the public mind to trigger the end of the global system. Is Congress scared? No. I’ll bet they are terrified—and rightfully so."

http://adask.wordpress.com/2009/02/15/the-first-electronic-bank-run/

Thu, 04/19/2012 - 14:03 | Link to Comment AbelCatalyst
AbelCatalyst's picture

If MF Global did not spook the sheep, when personal accounts where stolen in broad daylight, I'm not sure the sheeple are all that spookable at present. By the time they awake, it will be too late... Dream away little sheep, because when you awake things will not be as bright and shiny as they were when you drifted off...

Thu, 04/19/2012 - 14:07 | Link to Comment Peter K
Peter K's picture

But the Eur/Usd is above 1.3000, therefore, Euroland must be fixed:)

Thu, 04/19/2012 - 14:11 | Link to Comment Nobody For President
Nobody For President's picture

The 'temporary' suspension of the Schengen open borders agreement strikes me as being a really, really big deal. Doesn't seem to be reaching the MSM yet, surprise, surprise, but this truly strikes me as the first real hole in the EZ dike, the first real 'Beginning of the End' of the Euro Zone and the great Euro currency dream.

Having traveled in Europe before and after Schengen, I was really struck by how the open borders really was transforming Europe, and I really believed the Euro was gonna be a go. This is a huge backslide - HUGE! To start border controls is to condition the people for small import duties (only on a few select items, you understand) and export controls on only a few goods and...

We all know how 'temporary' government restrictions work - sort of like 'temporary' government taxes that Art Cashin commented on today. This feels like a knife in the heart of the EZ. Maybe that's good riddance, I don't know - the Euro seemed like a grand experiment in ending the centuries of wars and shit between European countries. Guess it was too much to ask...

 

And, as an aside, sort of: For those of you who have never traveled in UK and Europe, but have traveled in the US - if you ever do go to Europe (I highly recommend it at least once in your life), you will be blown away at how small Europe is - how close Sweden is to Belgium is to France is to Germany is to Switzerland is to Italy etc, etc. And with the Chunnel - how close UK is to France. It puts the centuries of hostilities to one another in a different perspective - it is like Oregon and Washington fighting each other for the last 300 years, with an frequent side-war with Idaho and Nevada, and don't forget the Idaho-Montana-Nevada alliance against Northern California (Evergreen!) busy with its constant wars with Southern California (New Hispanolia).

Want perspective? Overlay a (scale) map of California over a similar scale Europe - Put Crescent City in way north California over Stockholm, Sweden and see where LA will get you too...

Another shot: France is 212,395 square miles in area, Texas is 250,805.

Thu, 04/19/2012 - 14:57 | Link to Comment reTARD
reTARD's picture

What is bad for Europe may be near-term bullish for the US. The debt/credit primarily shifts around from one side of the toilet bowl to the other side.

Thu, 04/19/2012 - 15:53 | Link to Comment xcehn
xcehn's picture

"The bankers’ coup has triumphed in Europe seemingly without a fight. The ESM is cheered by Eurozone governments, their creditors, and “the market” alike, because it means investors will keep buying sovereign debt. All is sacrificed to the demands of the creditors, because where else can the money be had to float the crippling debts of the Eurozone governments? There is another alternative to debt slavery to the banks. But first, a closer look at the nefarious underbelly of the ESM and Goldman’s silent takeover of the ECB...."

http://www.marketoracle.co.uk/Article34209.html

Thu, 04/19/2012 - 16:33 | Link to Comment orangegeek
orangegeek's picture

Wait until this hits the US markets.  Primary wave 3 down according to elliott wave analysis.

 

http://bullandbearmash.com/index/djia/weekly/

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