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European Close Prompts Rally For 3rd Day
The New Year has ushered in a new pattern for the market - or perhaps has clarified an old one. The last 3 days has seen European credit markets notably underperform equity markets but stage a significant rally around the equity close each day. This rally then flops into US markets. Today was no different from yesterday - EURUSD leaked lower (holding under 1.28 here) all through the European day session - the question is whether we will see the same stability we saw during yesterday's US afternoon session in FX which will enable the equity strength to hold. We suspect not given that broad risk assets (CONTEXT) has notably not participated in the equity markets pull higher so far. At the same time as Europe closed, with financials massively underperforming, US financials were breaking out as XLF went green and BofA broke above $6. Volumes are above yesterday but below Tuesday for this time of day - still notably low on a medium-term basis. TSYs have been very volatile this morning but European sovereigns have been on a one-way path wider all day - closing near their wides. Commodities are lower (USD strength) but Gold is holding up relatively best for now - well above $1600.
The credit market is trending wider overall for the new year while stocks broadly are still higher (despite a significant selloff in the EUR). The orange ovals show the period around the EOD for European stocks and the bounce we have seen 3 days in a row - that has been faded each time.
ES (the e-mini S&P 500 futures contract) bumped up against VWAP a few times this morning and sold off (suggesting institutional sell orders were around) but gathered momentum to cross VWAP (light blue) as thge European close rally monkey appeared. At the same time BAC broke $6 and XLF went green for the day - so all is well. CONTEXT (dark blue) is rising here but is considerably unimpressed with the ES rally so far.
European sovereign spreads leaked wider all day. France ended 10bps wider (just off its worst spread levels over 150bps and 50% wider in the last week). Belgium and Spain (followed closely by Italy) were all very weak with Italy back over 7% yields and 520bps spread to Bunds in 10Y.
EURUSD is holding under 1.28 for now - following a very similar pattern from yesterday. Commodities have leaked lower but are coming back some now with Gold back around $1610 and Oil trying for $103 again.
The question of whether this Europe EOD rally will hold is tough but credit and broad risk assets say no for now - and we are seeing larger than average trade size into this rally - suggesting larger traders setting up for some downside.
Charts: Bloomberg
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Cuz silly US markets can get back to magical thinking when those nasty European markets are closed.
At end of day, week, month, year we still have debt saturated banks underpining debt saturated sovereigns that are underpining debt saturated banks. Debt saturation = broke => repudiations, defaults, and continued manipulated markets.
totally disagree with the magical thinking its more of a mkt manipulation....ideaology :
Algo creates demand by driving prices higher in anemic volume mkts, draws more suckers in ie retail customers and portfolio managers.....then the the CROOKS ...IE GS< MS< CITI, then all short the mkt and bad news comes out and boom mkt much lower and start all over again.
I find it completey rediculious that the bobble heads on cnbc and their guest do not even remotely discuss the impact Europe will have on our exports not to mention the financial institutions...completely irresponsible journalism, but then again they are not journalist just cheerleaders
The market has become a ponzi schem in essence, the only difference is the above mention firms have complete acces to fed window and the banking of Big Ben and can manipulate the market creating demand.At least in the old day of floor traders this kind of manipulation did not occur.
I dont think the ES WILL EVER BREAK LIKE THE CREDIT MKTS OR CURRENCY MKTS...the difference between today and 09 is that the fed is all in it will keep printing $ even if it means proping up Europe....
There is no decoupling.
Long MSCI ex-US, short SPY seems like a great pairs trade for those who are more risk averse.
They are trying to prove, we aren't Europe
Yep, we're even far more corrupt than even those European greaseball lowlifes.
Corzine bought a castle in France
its a jinga castle
From which he'll hurl insults and fart on our general direction.
markets broken..charts are useless in this environment
Exactly. Put me down for it will not hold.
It was apparent from the very moment that ADP reported its story of job recovery. That story was the ultimate sell opportunity, and people betting that tomorrow's BLS will be a better one are clueless.
That is Cdad's story, and he is sticking to it.
Next leg down beginning now.
next leg up beginning now. Cue triumphant music.
You are not paying attention to some very clear signals being broadcast by market components and currencies. Go ahead anyway...buy it right here and post your conviction afterwards.
This is how to kill the economy:
"We are very close" to tying monetary policy explicitly to some measure of overall inflation, Federal Reserve Bank of St. Louis president James Bullard said. He said the Fed may also be near making a collective statement about what level of unemployment is the natural rate, below which inflation pressures tend to rise.
> tying monetary policy explicitly to some measure of overall inflation
Which measure of inflation? iPads, Samsung Galaxy, or the Playbook? Decisions, decisions, decisions....
This is how the Fed created and will now reinforce Biflation: creating inflation in a de-leveraging environment (with other external sources of both inflation and deflation)
I am afraid that they will target GDP or some other measure. It could also be just talk to prop the market up. They have been doing this for 6 months.
Europe closes...all clear for usual throwing into high gear for US equity manipulation!
How to kill the economy, part deux:
Credit card rates near all time records
While they may be near record lows on mortgages and other loans, the average interest rate on new credit-card offers is 15.14% this week, flat with last week and just shy of the record high of 15.22% set in mid-December, according to CreditCards.com. The average measures 100 of the most popular credit cards in the US. A year ago, the national average was 14.71%
More Goldilocks economic model....Sure, it may look bad, but its a bit better than this manipulated number was, and not quite so bad as that phonied up number.
Yes. But Goldilocks for the 90s was drinking soups that were neither too hot nor too cold. Goldilocks today has both soups that re too hot (15% + credit card rates for consumers) and too cold (near 0 rates for PDs, WS and banks)
OT: And here's Unicredit euro break up clause. But but but, head of ponzi bond institution EFSF, Klaus Regling, just said today he's "very CONfident" abt the future of zEuro. So why Unicredit is not? Lol, too funny...
http://ftalphaville.ft.com/blog/2012/01/05/819881/and-heres-that-unicred...
There goes the IYR and XLF on their normal 'higher at all costs' whiplash moves.
WHEEE!!!!
That's your Simon Property Group effect [on IYR]. Low volume BS move today...which should be undone.
Oh, and a headline from today that no one is talking about, of course:
http://www.sacbee.com/2012/01/05/4164966/mall-of-americas-bloomingdales.html
B of A is continuing their non-stop fraudfest higher also.
They just aren't going to stop this shit.
SPG to $200 or bust, I guess. Why not?
Agreed...that BAC is being pushed right now. Very curious. But...but there are still far too many people that need to get out of that stock, and they will use this strength to do it.
Real Estate is the truest recipient of deflation, and the desperation signal out of the FED yesterday [re housing] on this topic is the evidence.
You know it's a bad economy when you read:
Constellation Brands 3Q Net Slumps 25%, Missing Views
The maker of alcoholic beverages saw..sales decline in recent quarters as many consumers remain budget-conscious in an uncertain economic environment. Stepped-up promotional spending has also weighed on the company's results.
A guy at the liquor store told me that the 'plastic bottle' rotgut brands are whats selling most now.
It's cold gin time. No more yuppie brand-name liquor
Good, let moonshiners make some money. Buy local yeiii.
These "Sin" products get tax to the hill, and their price increases and affects demand. Taxes are NOT paid by businesses, but by the consumer. Every business has to make a profit and an acceptable return on invest to be viable. Can't have a nice single malt and cigar without taking a second job.
Brew yer own...
Pretty sad.
Being a somewhat heavy drinker over the last few years I decided to cut back last year to a cheaper whiskey, which does come in a plastic bottle in 1.75L. The local liquor store also knocks a extra 10% off of case prices
While it is a luxury to consume, people will always want it. I consider a stockpile a booze a great investment in current times.
"With ordinary Greek grandmothers now joining the wealthy in seeking sanctuary from economic chaos, banks have embarked on an interest rate war, with some smaller institutions sweetening terms to up to seven percent to woo customers.
Retail bank deposits in Greece have plunged to five-year lows as fears mount the stricken nation will fail to meet international lenders’ bailout terms and restructure loans by March, raising the spectre of a ditched euro, a return to the drachma and a sharp devaluation."
http://www.firstpost.com/fwire/who-gains-from-greek-italian-crisis-safe-...
Looks like the ECB must print to raise the additonal Billions to help slow down the depression there. Is there another solution to raise funds? I guess the Fed can swap with the ECB then the Fed can do the printing instead........
interesting look at the silver supply demand numbers:
http://www.financialsense.com/contributors/steve-angelo/2012/01/04/silver-sales-surpass-domestic-production
Today is all about the Euro. Mr. Market is finally getting tired of European shit. even at 1.27 implies its worth a 27% premium to the dollar. They both suck but why the euro was priced at 1.30 was beyond belief.
This is falsely making the dollar stronger and gold and silver holding their own says volumes.
refinery capacity running at 84% and the big oil thugs still have excess capacity so they export gas and diesel so they can keep gouging the consumer and prop up a dying GDP. This country is so screwed up no one even adresseses this roberry as there are to many other houses of cards to hold up of more importance.
BAC up to 6? what a laugh. Everything is this centrally planned market is all out of whack. Theme for 2012 shits is going to start reverting to the mean.
And then the Fed starts talking of addressing the mortgage problem about 5 years to late. One full Presidential term and still FRE and FNM are not addressed. Oscammer will not get near it.
I think what the market is saying is get ready for liquidity. Not if but when the FED will print (whether right or wrong). The dollar strengthening is like a wrecking ball in the economy and in an election year. We are going to see something drastic done way before November (War, printing, ...).
Let's see if they have the balls to do 4 days in a row
Looks like selling into the pops to me....Bernank probably sent out a memo notifying anyone who wants out, do it now while the FED is padding it.
Who needs an economy or anyone working for that matter when all you really need to do is keep the Russell 2000 from ever going down and the media will go along with the bs message.
Wonder how they will feel at Euro 1.20. They are headed right for the 08 lows without blinking.
2008 part deux!
The VXX is hitting some major support arount 32.50. Curious to see if it bounces or closes below.
Gold!
with all the bad news in europe this morning, the euro markets didn't seem to care! because, the markets are just a sideshow! the real show is all the debts being bought by the globalists! gas prices at the pumps are kept low not to arouse the sheeple! when the timeline for the debt purchases is done, that's when we wake up one morning with a bank holiday, internet down. WAKE UP PEOPLE!!!!!
Check out BofA, what is that all about? Did they discover gold under their branches?
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