Europe 'Soars' To 4-Day High On Draghi 'Solution'

Tyler Durden's picture

UPDATE: 7 of the last 8 moves in Spanish spreads of this magnitude were followed by a more dramatic selloff within 2-3 days.

It was a good day; of that there is no doubt. Equity, FX, credit, and sovereign bond markets all retraced  recent weakness in a hurry - extending some of the gains from yesterday's Nowotny nonsense. With Merkel away on vacation and unable to fade this exuberance - though the IMF did their best reality impression. We don't mean to steal the jam out of anyone's donut here but in the case of EURUSD, 2Y Spain, 10Y Spain, Italian bonds, and Italy and Spain's equity indices - today's 'game-changer' merely reverted us back to Friday's close - filling that gap. In most cases this still leaves the levels notably weaker than pre-EU-Summit - in spite of how much certain CNBC hosts 'believe'. Bt we would be unfair if we did not note the moves: IBEX/FTSEMIB +5.5%; Euro Stoxx +3.9%; Spain 2Y -87bps, 10Y -45bps; EURUSD +136pips - pegged at 1.23; Italy 2Y -89bps, 10Y -37bps; Europe's VIX dropped 1.7vols to 25.4%. The charts say it all for context here.

EURUSD ripped 200pips or so last 24 hours but looks like a stop-run to recent resustance levels and only 38.2% retracement of the recent swing lower...


Spanish 2Y (price) - seemingly the big thing to focus on - well its back at Friday's levels and the same levels as in the crisis pre-EU-Summit...


Spain's IBEX managed to get back to Friday but is well below pre-Summit levels still...


Italy's FTSE MIB index recovered to Friday's close only...


and yet Europe's VIX remains notably above Friday's close...


and while Credit did tighten - expectedly so - it remains significantly less sanguine that stocks across Europe - with some give back into the close...

and just in case you are interested in the history of moves like this...

7 of the last 8 times we saw a compression in yields on 10Y like this - the next few days saw a larger decompression occur...


Charts: Bloomberg

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laomei's picture

Buy the rumor, sell the news.  Nothing is fixed and talk is cheap.

The Monkey's picture

Classic. Right as Biderman went 100% bearish.

john39's picture

just another example why people stay out of the markets... all it takes is a total bullshit rumor to cover for blatent manipulation...  which can hit without any advance notice...  no way to plan, and facts mean nothing.

Mr Lennon Hendrix's picture

I like how people point to CB rumors when they spur markets but not deflationista rumors about king dollar.  Hyperbole runs rampant when one stays in the neo-keynesian dialectic.

malikai's picture

Some quants see it coming.

Silver Bug's picture

This is just more extend and pretend talk. Ignore it.

Peter Pan's picture

Let's make a mental note of today's movements so we can draw some saner conclusions in a month's time. This market is schizophrenic.

Mr Lennon Hendrix's picture

In a months time the DJ will be at 6k, oil will be at 35, and the dollar will be the best investment to have because the dollar is such a rare element.

King dollar!

LetThemEatRand's picture

I'm sure it is a coincidence that the talking heads in the financial media have become increasingly bearish the last few days, pushing muppets into short positions ahead of this rally.

The Monkey's picture

If you short something that is already heavily shorted, and the prices have already dropped hard, then you have a high chance of loosing your ass.

RobotTrader's picture

Gold falling off pretty quick, calling BS on any kind of Quant Sleaze.


No QE is needed with consumer and homebuilder stocks are rocketing and still pinned near 3-year highs.

Bernanke will open his pie hole any minute now to get oil and the grains back down to the lows.

Mr Lennon Hendrix's picture

Yeah, $50 move in 2 days.  That's nothing.  Wait until it moves $50/day.  That will make more sense.

TPTB_r_TBTF's picture

Gold and Silver will continue to fall as Global Warming progresses.  As ice sheets melt, the geologists will swarm over the reclaimed land to find veins and mother lodes.

youngman's picture

I am long new housing and recreation developments in Greenland....

disabledvet's picture

We KNOW the dollar ain't going anywhere...Senator Schumer made sure of that. The question to me is "is what the Mario Brothers up to something new?" I don't understand the market reaction it must be I'm ignorant of something...and I better go out there and find out what "it" is. Clearly we've got short squeezes galore that have been going on for sometime...that is not all good however because it takes liquidity out of the market.

Haager's picture

IBEX and MIBTEL look extraordinary, DAX did also a great climb from a low 6322 up to the max of 6592 - It sure is a good day vor EVAs and HFT.

And now I am waiting for a call from Spain, Italy or France about some minor but nevertheless unexpected financial problems.

Greece also tried desperately to ring up Bob from Barclays but he's not respondng.

hugovanderbubble's picture

SELL and short


Long VIX for BRADLEY TURNING POINT -28th july ---->next 4 /7 days --------------> LOAD VOLATILITY

WineSorbet's picture

BTFD once again proves right and will ALWAYS be right until it's over and it will be obvious when that end point is reached.  Until then, buy away ROBO.

Mr Lennon Hendrix's picture

Na, just go long the dollar because the dollar has a limited supply and its intrinsic value is unqualifyable.

fourchan's picture

mario is putting on "la bella figura" the beautiful face or appearance, its well known in italy, in america it could be called a bold faced lie. there are a set tools that have been used by the creatures of jeckyll types around the world, the tools that havent worked before and will not work again. the euro is boned.

virgilcaine's picture

Don't forget the Jackson A Hole meeting in August.

cdude's picture

Breaking news: Mario Draghi's car spotted with "I <HEART> the Euro" bumper sticker - Markets Soar!

azzhatter's picture

I've got a Mario Draghi swinging from a lamp post bumper sticker

JohnKozac's picture

"There's never been a better time to buy Euro...."


..;or did they mean Zynga?...or FB?

Bastiat009's picture

The media (main stream, in the US and in Europe) support the OWS protest, support Obama, defend the small guys but also love big banks, constant market manipulation in favor of the 1% and the destruction of the currency which hurts mostly the middle class.

The depression started in 2008 because of the banks and has been going ever since because of the media which evidently refuse to inform and educate the public.

fpcallc's picture

"The depression started in 2008 because of the banks and has been going ever since because of the media which evidently refuse to inform and educate the public."

I have to disagree that a lack of education for the public is partly to blame for perpetuating the current situation. There are plenty of people out there pounding the table and letting anyone who will listen know what's coming. These are not fringe analysts with little or no credibility. Mohammad El-Erian and Bill Gross, Mark Faber, George Sorros, Charles Biederman, Kyle Bass, even poor Rick Santelli, stuck there on CNBC as the only sane man in a world of crazies. The list goes on and on. Every day I see somone on MSM telling us whats really what. But the sheeple don't believe it!! It's goes much deeper than lack of knowledge. Watching the market these days is a great lesson in human psychology. The masses have been placated and know nothing but maintaining the status quo. They see no other alternatives. So, the level of cognative dissonance that a seemingly rational human will allow themselves to accept these days becomes mind boggling!!!

youngman's picture

Its funny Mario says he is going to do whatever it takes...which with a little simple math is 3 trillion...and the EURO gets STRONGER......I don´t know but if you flood the world with EUROS...should make it weaker in the old economics classroom...

Nobody For President's picture

Screw it - buy booze, when it goes down, you feel good.

RobotTrader's picture

SAN and BBVA still not backing off.

Hype Alert's picture

He just needs to say it a few more times today to get the most bang.  It's really nothing he hasn't said before, so it should work again, right?

milanitaly's picture

You are looking at the wrong Mario.

It's Mario Monti that playing the music and sent Merkel on holidays with simple two words: euro exit

ebworthen's picture

Super Mario opens his mouth and utters some empty words.

"Whatever it takes" gins markets, martini's all around.

When people get down to the olives and the drinkers are drunk party on the deck.

When the hangover comes the next morning, get out the aspirin.

Robots picking the pockets of the humans while they are in drunken slumber.

Lather, rinse, repeat.

falak pema's picture

Dosn't this just prove one thing : these markets are just froth and bubbles and all run by bots for vulture funds. No such thing as fundamentals, its just grab as grab can. Shut down this manipulated casino as it insults human logic and feeds like a cancer on the real economy. A dog barks in the alley and those markets gets nervous. What a laughable spectacle. If it were not all whipped up with the blood of the economy mixed with trillions of electronic funny money run by these shit houses of fractional reserve and debt profileration.

Its time to scrap these capital markets and create a new architecture where bots, HFT, vulture naked plays and 20/1 carry trades on Zirp funds should be banned for all synthetic voodoo type products; shut down the casino pronto! 

Anybody who pretends this is an expression of free market capitalism needs a lobotomy.

Those sovereign rates imposed by these vultures on Spain and Italy are an expression of this manipulation. One bark and those dumb larks fly away like panicky buzzards feeding off carrion. They'll be back as the hot money is the blood line of this decadent breed that knows no other game than the Seig Heil crowd of yesteryear. They are the new fascists of the financial world who want their pound of flesh, irrespective of who will be their next expiatory victim, its a serial killer disease and it'll end in financial Auschwitz.

fpcallc's picture

Listening to Simon Hobbs gush over how Dragi's BS this morning is a turning point for Europe makes me wonder how these people who report on the financial markets on a daily basis can be soooooo gullible to believe, with full conviction, whatever any CB or "unnamed gov't official" has to say regarding a fix for these insolvent sovereigns and the Euro. If there is so much that the ECB, or the Fed for that matter, could do to "fix" the current situations in Europe and the US, why haven't they done it yet? Exactly what are they waiting for? It's like everyone believes that there is some super-secret monetary policy move that is being held back for just the right time and circumstance and when it comes, it will solve everything. CAN EVERYONE BE THAT DUMB? Or is everyone just playing Central Bank Roulette where they think that once things start really crumbling that they'll get out of the market before everyone else and won't be the one holding the bag. We saw how that worked out for the banks with their sub-prime mortgage holdings. 

Bastiat009's picture

All it took to make the Greeks and Spaniards wealthy again and able to pay off their debts was Draghi's pledge to break the law and print euros. Funny world. 

cebri88's picture

Draghi was long, that's all folks. 

MoonSpotPrice's picture


"You keep using that word. I do not think it means what you think it means" ~ Inigo Montoya.