This page has been archived and commenting is disabled.

Europe Ends Week On Ugly Note

Tyler Durden's picture




 

We have been warning of the bearish divergence in European credit markets all week and today saw that trend continue as the best-performers of the year-to-date become the biggest losers on the week. Financials and high-yield (crossover) credit have dramatically underperformed this week (with XOver +50bps touching 600bps once again) as credit overall trades considerably wider than before the NFP-print jump. Investment grade is wider but diverging a little today as decompression trades are laid back out and up-in-quality trades are reconsidered - and away from financials which have seen their senior unsecured credit spreads jump from under 190bps to almost 220bps on the week. Broad equity markets in Europe also saw their worst week of the year but are lagging the credit sell-off for now and sit (for context) right around the pre-NFP jump levels. Sovereigns were mixed on the week with the last couple of days seeing notable deterioration. Spanish spreads are +33bps, Italian spreads are -9bps on the week but are 25-30bps off their tights but it appears Portugal was the darling of the ECB this week as it managed an impressive 100bps compression (10Y now almost 500bps off its wides on 1/30) but this impressive tightening only gets the peripheral nation back to 1050bps (and mid-January levels - still triple the level of risk of a year ago).

In FX, JPY was stable as EUR weakness pulled USD stronger against all the other majors as it closed Europe under 1.32 - only at Tuesday's levels. The USD strength (and event risk concerns) have stumbled commodities though they bounced modestly into the close with Gold holding $1720 and WTI back above $98. 10Y Treasuries underperformed Bunds by around 6bps on the week but both rallied back notably overnight into the European close (leaving 30Y almost unch on the week).

We noted the divergence in European financials credit and stocks earlier in the week and hope traders had the opportunity to capitalize on stocks playing catch up to that downside.

 

European stocks (blue) are still outperforming (for now) as credit overall widened dramatically this week. Credit is now (red oval) much wider than pre-NFP levels (green oval) while stocks are holding that level.

Spain and Italy notably underperformed today. Portugal had a great week - thank you ECB - but in general sovereign spreads (10Y) have remained in a narrow range this week - not extending their year-to-date gains.

 

Charts: Bloomberg

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 02/10/2012 - 13:00 | 2146320 Taterboy
Taterboy's picture

But, but, last night Cramer told us that Europe would be better next year!

Fri, 02/10/2012 - 14:20 | 2146763 Texas Ginslinger
Texas Ginslinger's picture

Did Leonard the monkey agree with Cramer on that..??

Fri, 02/10/2012 - 16:13 | 2147348 Zero Govt
Zero Govt's picture

They're all monkeys on CNBC ...didn't know one's named Leonard.

Any look too in-depth with the CNBC channel and your head soon hurts ..best to watch CNBC with your brain switched off i find

Fri, 02/10/2012 - 13:02 | 2146329 Ancona
Ancona's picture

I can't wait for the weekend rumors and sound bites from Greece! Should make for good sport. Hopefully, they realize the need to tell the IMF/ECB to go pound salt and leave the union, because if they don't, i believe they will experience a revolution.

Fri, 02/10/2012 - 14:12 | 2146721 AldousHuxley
AldousHuxley's picture

EU = European UNION

 

What a great union it is...

they won't help you when you are in trouble...

they only wanted to sell you debt so they can make more money...

 

Greece should go to the North Korean route. Just launch some rockets, call it a nuke capable of reaching Germany, and ask for more free stuff.

Fri, 02/10/2012 - 13:09 | 2146361 Tsar Pointless
Tsar Pointless's picture

So what? The S&P is grinding higher and higher off the lows as the day goes on here in the states.

By day's end, US markets should be flat-to-green.

Same as it ever was.

Fri, 02/10/2012 - 13:26 | 2146432 B-rock
B-rock's picture

Buy TNA at the bottom of the first dip after Euro close.  (but maybe not today -- Friday and all...)

Fri, 02/10/2012 - 13:26 | 2146435 Conman
Conman's picture

If this was 2011 i'd say horse malarky. But everything I've seen since December confirms this.

Fri, 02/10/2012 - 13:10 | 2146363 lolmao500
lolmao500's picture

Bullish for 2013...

And a little downgrade of Spain would be in order.

/sarc

Fri, 02/10/2012 - 13:10 | 2146368 resurger
resurger's picture

 

Had a hard time shorting the DOW... so i just bought VXX @ 27 a piece

ill buy more when it goes down.

The market is fucking BULL SHIT!

 

Fri, 02/10/2012 - 13:15 | 2146387 zerotohero
zerotohero's picture

It truly has become a big stinking pile of BS - from commentary on "Entertainment Tonight" style news stations to the carnival style politics around the world. When one truly steps back and looks at the state of the world it is a bloody mess - something is going to give and its is going to get ugly.

Fri, 02/10/2012 - 13:28 | 2146440 resurger
resurger's picture

it's Fucking Bullshit when you have:

1- The people of Greece getting fucked by their bosses and their politicians to accept Austerity

2- When you have BlackRock Investment telling you that you have to be 100% in Equity

3- When you have Warren B (That stinky old geezer telling you to sell PM and Bonds and to buy Equity

4- When you have Face Book valued at 100bn

5- When you have the MSM protecting the Oil Giants by peddling the Iran War propaganda.

6- When you have Robo Cop driving the market

7- When you have Jim Chanos on the Plunge Protection Team

8- When you have Jon Corzine free fucking whores and sniffing pure coke while the farmers are fucked

9- When you have investors investing under the influence IUI of Qeasy 3

 

 

Fri, 02/10/2012 - 13:36 | 2146491 Yen Cross
Yen Cross's picture

 Good stuff!

Fri, 02/10/2012 - 13:11 | 2146373 satan2liberals
satan2liberals's picture

Bout damn time.

 

I want to see armageddon come  monday morning in the overnight futures.

Fri, 02/10/2012 - 13:11 | 2146374 alfa
alfa's picture

The Greek government of PAPADEMIOUS is not able to govern Greece any more.

The situation of the social uprising is explosive.

The greek parliament even vote the austerity this program is not able to work because of the hostility of the greek people.

Nota bene that on Monday the greek stock market will be in red sign also the european.

I think that the european union will be out of order.

Fri, 02/10/2012 - 13:12 | 2146377 LongSoupLine
LongSoupLine's picture

 

 

CNBS buzz words of the day (read: complete propaganda sell-side bullshit):

Priced in, momentary pullback, profit taking, investors, attractive valuations, dividends, AAPL, AAPL, AAPL, AAPL, AAPL, (did I mention AAPL?), market taking a break, equity safety trade, attractive higher beta stocks, Clint Eastwood (this one is the top, "don't look at real news" distraction of the day).

Fri, 02/10/2012 - 13:22 | 2146413 Yen Cross
Yen Cross's picture

CNBS is nothing more than a 24/7 infomercial! When the markets go down it's Greece. When the markets go up it's Greece. CNBS has no game plan!

Fri, 02/10/2012 - 13:27 | 2146437 Tsar Pointless
Tsar Pointless's picture

So...Greece is the word. Is that what you are trying to say?

Fri, 02/10/2012 - 13:48 | 2146501 Yen Cross
Yen Cross's picture

Please???? Don't put words in my mouth.  Mediocre numbers, Stealth printing/borrowing,hedge fund traders on the chopping block,food stamps, weekly downward revisions. Need I continue?

Fri, 02/10/2012 - 13:22 | 2146414 Conman
Conman's picture

Its ok the market will rally from the lows and end green once again, just because thats what it does now.

Fri, 02/10/2012 - 13:25 | 2146429 falak pema
falak pema's picture

Controlled market, controlled Greece; 4 ministers of extreme right excluded from government; goodbye LAOS. 

Now lets see what the other says to the street and to the Troika next week. I'll give you ONE guess on that! 

As far as markets are concerned its a dangerous roller coaster on remote control by TBTB. Many balls in the air, Jack and the beanstalk at work at the FED. Draghi the Loch Ness cousin raised by the Squid knows how to print. He will show it again big time once the Greeks have shown their final hand or their grand stand out of EUro land. EIther way its built in.

Thats what control is about.

Fri, 02/10/2012 - 13:35 | 2146480 Yen Cross
Yen Cross's picture

 Here it goes the CNBS currency witch, is blaming it all on Greece. How's that Mexican Peso trade working out for ya?

Fri, 02/10/2012 - 14:18 | 2146755 Olympia
Olympia's picture

Loan sharks knew that if they took the dollars printing machines under their control they could suffocate the world ...they could initially suffocate USA and after taking the USA from the Americans, they could move and suffocate the whole world and take the countries from their people.

FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing”...

It cannot be possible but just in the USA for only the last year, more than one million houses were seized. It cannot be impossible but the New World has returned to tents and shelters ..has returned to the ages of Columbus. It cannot be possible that we allow to a few loan sharks looting the toils and the assets of people...

http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html

------------------------

Global Debt Crisis

Authored by PANAGIOTIS TRAIANOU

Fri, 02/10/2012 - 15:03 | 2146971 ninja247
ninja247's picture

Really good analysis.

Fri, 02/10/2012 - 16:00 | 2147280 Zero Govt
Zero Govt's picture

Lookin Good

Lookin Gooood

...a few more weeks like this and the European stock markets may be close to reflecting what's actually going on in the real economy

...not that that is actually important

...chill out for the weekend, it's back to blowing bubbles on Monday 

 

Fri, 02/10/2012 - 17:38 | 2147698 Olympia
Olympia's picture

GERMANY, the DISGRACE of Europe

...the barbarians, who forced beautiful Europe to get down Zeus’“back” and made her a prostitute ...the unworthy Europeans, who in 1945 “took Europe down” from “Mount Olympus” and in 2012 relinquished “enslaved” Europe to the Phoenician loan sharks.

Germans are proved to be the easy solution to breach Europe’s door. Whoever wishes to “set foot” on Europe and demolish it, the only thing he has to do is to “fool” the Germans. For a second time in less than fifty years, Europe’s idiots become the victims of foreigners and they serve their interests at the expense of Europe...

 

http://eamb-ydrohoos.blogspot.com/2012/02/germany-disgrace-of-europe.html

_____________________

 

The German traitors of Europe along with the Phoenicians from Asia may have forced Europe to get down from the "back” of the Greek “bull”, but it remains to be seen how they shall pull it through with the “bull”.

 

Authored by PANAGIOTIS TRAIANOU

Sat, 02/11/2012 - 10:11 | 2149026 disabledvet
disabledvet's picture

let me sum of the world Europe is living in "time a trillion": "you gotta pay for that. you gotta pay for that, too. and that. and that as well. yep, that costs money. so does that. and that too."

Do NOT follow this link or you will be banned from the site!