Europe Ends In A Sea Of Red

Tyler Durden's picture

Spain's broad equity index suffered its second largest single-day drop in almost 4 years and Italy also tumbled almost 5% as everything European was sold hard. EuroStoxx (the broad Dow equivalent) is down almost 3% as EURUSD dropped to two year lows, EURJPY to 12 year lows. AAA safe havens were massively bid with Germany, Denmark, and Switzerland all to new low (negative) rate closes. Core equity markets did suffer though with Germany down 2% but it was the periphery that saw the damage in credit-land with Spain 10Y closing at 7.27%, 610bps over Bunds (and 5Y CDS over 605bps). Spanish spreads are +130bps from post-Summit (and pre-Summit) and Italy +78bps, but it is the front-end of the curve that is most worrisome - Spain's 2Y is 132bps wider in the last week. Europe's VIX exploded by over 4 vols to 24% today and once again looks decidedly high relative to US VIX.

Spain and Italy surging to as bad a performance as Summit...

but it is the front-end that is a disaster! This is where all the LTRO debt is being held that was put on as part of the Sarkozy carry trade - ECB margin calls here we come!!

but while this is apples to apple-like things comparisons, the difference between credit and equity market reactions post Summit remain remarkable...(though today saw a pretty decent turnaround)...

and broadly European stocks were hammered today as hope fades...


charts: Bloomberg

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SheepRevolution's picture

"Europe ends in a sea of read"? Bullshit. We've been socialists since att least 100 years.

iDealMeat's picture

The cost of damage and "managing" protesters will outweigh the savings of austerity..  Europe is fucked..


Gold will be on sale when they all make the last rush to the USD.


Don't fight the FED.

French Frog's picture

"Europe's VIX exploded by over 4 vols to 24% today and once again looks decidedly high relative to US VIX."

Or maybe it's just the US VIX that looks decidedly low because the US is able to paper over the cracks better than we can (at least for the time being)...?

kaa1016's picture

I think something ugly is coming, with today in Europe being a preview. If you look at the deep out of the money August VIX call buying the last 2 weeks, it's clear that the big boys have been positioning for this upcoming down move. The US VIX will catch up soon enough... 

viahj's picture

is it just me, or does it seem that downgrades, ECB (non)collateral annoucements and European market sell-offs come right before US Treasury auction week?  could it signify that TPTB will collapse everything else they can prior to the almighty $ taking it's final appearance on the stage of collapse?  maybe i'm too paraoid but i don't trust those Ewoks.

Buck Johnson's picture

No kidding, the protesters are becoming to much for the govt's of europe.

firstdivision's picture

Time to go long til EOD.  Gold and silver say so.

TruthInSunshine's picture



"Get to work crushing the USD vs EUR, Mr. Chairman, now that the european markets are closed, and make sure those POMO trainees are ready in less than two weeks, my little bitch."


---Senator Chucky "Fuck Flyover Country-Wall Street Is My Constituency" Schumer (D- Global Banking Cabal District)

Nussi34's picture

Like the Ikarus, eh I mean Euro!

youngman's picture

It looks like gold and silver are getting some of the action..but most of it is going to Japan and the USA...

eclectic syncretist's picture

I've got a real good feeling about silver over the next year or so.  Bought more physical today.

Had to roll over my XLF put options though.  Didn't expect it to hold up nearly as well as it has over the past month.

fonzannoon's picture

It's not fair that this is 2011 all over again except I feel like I have aged 15 years

Yen Cross's picture

 So TRUE!  2012 is front-running 2011 by 2 weeks. the markets peaked @ the end of July last year.

The Big Ching-aso's picture



Eursterity not working out so well it appears.


Yen Cross's picture

Ok you can have your semantics (ES) based peak @ March of 2011 last year. To the a-hole that flaged me. The F/X risk markets peaked in July.  Happy now?

BeetleBailey's picture

Ker-sploosh - goes the Euro..........

Ker-Flop goes the Espana debt pile of bullcrap...ole!~

Ker-SCHPOOUTZ goes the entire EU region of looting banker-assholes and political liars.


DoChenRollingBearing's picture

And we're but six months behind...

JustObserving's picture

$700 trillion in derivatives puts the US in the same boat.

Falcon15's picture

Less, really. Perhaps 2 weeks to a month.

Squid Vicious's picture

Bullish! Decoupling! Green Shoots! Housing has bottomed! ... last muppet to BTFD is a ... muppet!!

JustObserving's picture

What is going to improve this situation?  As Spanish and Italian markets fall, budget deficits get larger and the bond yields get higher.  Germany cannot provide any more support.  Looks like a crash is imminent - that will be the cue for the Central banks of this world to engage in coordinated printing.

20-20 Hindsight's picture

You've got that right, JO You just can't kill the fucking beast.  Die, you fucking banksters, die! 

101 years and counting's picture

time to schedule Euro Summits 20, 21, 22....48, 49, 50!!!

Yen Cross's picture

 That should put some teeth in the markets. Just like those algo driven buy/sell orders on the 1/2 hour.

  Actually the markets will probably just " GUM " them selves to death, as the " Euro Summits", have become ( toothless) & antiquated!

Bubble's picture

The PMs have held up well. In recent moves like this they get a smack down as well. Time for them to catch a BID

Cangoroo's picture

Spain and Italy will leave soon and devalue. These debt levels are sustainable for the state. But costs of capital for businesses will cause an exit. And even if they devalue, country risk premiums will weigh on valuation. A haircut solution seems more and more unavoidable.

fockewulf190's picture

From Sold Hard to Die Hard:Die Broke.

_ConanTheLibertarian_'s picture

it reads like a new Die Hard movie

Dubaibanker's picture

Paging....Mr. Mario Draghi....Paging......Mr Mario Draghi......Please announce date for yet another summit and report to the next summit location IMMEDIATELY!

q99x2's picture

The mass murderer in the oval office is speaking about the mass murder. 

Green by the Bell.

Should reality make sense or simply compell the need.

One thing I learned in class about Germany is that they didn't send all their manufacturing offshore and that is why people are still employed there.

But the banksters are out to get them more than ever now. I think they should go after the City of London legally this time.

DrDinkus's picture

Where do we go from here? Will this Sunday night be the one we've all been waiting for, as the tsunami from Asian markets crashes into southern Manhattan?

20-20 Hindsight's picture

I'll only believe when I see it.  Somehow, there's always a knight in shining armour that comes to be "rescue" in extremis.  Who will it be this time? 

ThunderingTurd's picture

They must not have the 'red' button that buoys all markets.  We are so lucky to have manipulated markets that have set levels of support...

hugovanderbubble's picture

and the most funny thing...



1yrs should be 10%


Spanish Politicians and banksters u will die ALL ¡¡¡ 


Snakeeyes's picture

What did they expect? Yield spike, stocks plunge. A Socialist recovery.

adr's picture

But all the latest IPOs have been smashing successes with a 40% opening pop on average. Post IPO underwriter and insider euphoria, they haven't been doing so well. But to say the stock market is there to make money for main street investors, is like saying a politician is honest.


Use free fed money to bid up the stock of the day, sell, book profits. RINSE REPEAT.

The scam artist used to need to get the peoples money from them directly. Now they just use the government to take it.

blueridgeviews's picture

Nothing to see here folks.  The world's central banks combined with the TBTF's will pump the matrket on Monday.

ghostfaceinvestah's picture

The DAX just amazes me.  Despite today's drop it is still up big for the year.  Do the German's really not understand who will pay for all this?

misnomer00's picture

i am looking for confirmation for my bearish case only by looking at dax because of the clear downtrend in its chart which started may last year. at least a 30% fall is expected, if today's high is taken out then this fall might get delayed by a couple of months.

as i type this, post european market close ramp up starts in ES.

Cangoroo's picture

Well yes, but who benefits? The Dax is not as representative as the FTSE or the Dow. The vast majority of German companies is not listed.

magpie's picture

It's where the 'smart money' is, compared to the rest of Europe- ergo also less volatile as the relative safe haven. Though i have the suspicion that the CAC has been propped up the most.

timbo_em's picture

I don't think the vast majority of Germans understand what is going on, however, I think that the performance of the DAX (and to some lesser extent the CAC 40) ytd can be contributed to foreigners buying assets in safer havens.

THE DORK OF CORK's picture

Given that the ECB is clearly a tool of the FED the Gaullist sale pitch of that currency was a fake.


In this light Euro countries are much better off going back to their national currencies & thus reducing their $ exports for oil in a dramatic way without destroying their economies as Mario has done to Italy this past year.

Peter K's picture

Moves in ITL and ESP sov debt were quite impressive this week.

But to tell the truth, it feels like there is something strange going on in Euroland.

It started in May, around the time of the post LTRO2 blowout. It was like USD funding was starting to flow into Euroland from somewhere. And even though the EZ situation fundamentally is much worse now, i.e. Greece is more of a disaster, Spain is weeks from a full bailout, Italian banks have spent more money on the Sarko trade than they took in from the LTRO's, not to mention the whack job in France that is trying to prove Marx correct, and the German economy that has topped out due to the Chinese slowdown, I don't see the level of panic that was present either in May of this year, not to mention the panic in Dec of 11.

Anyone else out there noticing the same thing?

mayhem's picture

Rally coming Monday no doubt

miltiadis's picture

Everyone that knows history knows what will happen if Euro fails.....

one word WWIII