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European Credit Buying The Rumor; European Stocks Not So Much

Tyler Durden's picture




 

Whether it is "buying-the-rumor" to "sell tomorrow's news" or some contagion from domestic bank-to-sovereign credit arbitrage, European credit markets are giddy with the Draghi rumors. European sovereigns are better but are leaking back a little now - with 2Y limping higher in yield. European stocks seem thoroughly unimpressed for now broadly-speaking (despite EUR strength helping drag US equities higher?) The world, it seems, has no idea what is going on once again... and then Merkel adds this:

  • *MERKEL TELLS LAWMAKERS SHE OPPOSES UNLIMITED ECB BOND PURCHASES
  • *MERKEL CAN ACCEPT TEMPORARY ECB BOND BUYING, BARTHLE SAYS
  • *MERKEL CAN ACCEPT ECB BOND BUYING OF SHORT MATURITIES: BARTHLE

Which sends EURUSD into spasm...

 

European stocks (blue) not impressed as European credit rallies handsomely...

 

Or is credit catching up to equity's hope...

 

with most practically unch...

 

 

but could it be driven by the Short Sovereign, Long Domestic bank arb?

 

and EURUSD has been very volatile this morning...

 

and this absolute nonsense - which sums up the European idiocy perfectly:

Sept. 5 (Bloomberg) -- Chancellor Angela Merkel told lawmakers in Berlin today that she supports both European Central Bank chief Mario Draghi and Bundesbank President Jens Weidmann even as they spar over ECB bond-buying proposals, two participants in the closed-doors meeting said.

 

Merkel said that both Draghi and Weidmann are carrying out their respective mandates, the party officials said on condition of anonymity because the meeting was private. Merkel told the lawmakers that she therefore sees no contradition in supporting them both, the officials said.

Charts: Bloomberg

 

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Wed, 09/05/2012 - 10:25 | 2764311 GetZeeGold
GetZeeGold's picture

 

 

Well...you always buy the rumor.....even if it isn't true!

 

Wed, 09/05/2012 - 10:27 | 2764322 TIMBEEER
TIMBEEER's picture

Please Angie, just let them print and let's postpone the crash. I have made a number of good deals for the entire year of 2013. I'll get richer and I'll be able to buy more gold. Just .. don't let it crash yet, yes?

Wed, 09/05/2012 - 10:32 | 2764338 flacon
flacon's picture

TEMPORAIRLY - suspend the convertibility of dollars for gold. TEMPORAIRLY. ....

Wed, 09/05/2012 - 12:59 | 2764882 twh99
twh99's picture

There has been no convertability of dollars to gold since 1972.

Wed, 09/05/2012 - 14:56 | 2765418 Stackers
Stackers's picture

Trillions in Euro printing = stronger Euro ............. ????

Wed, 09/05/2012 - 15:46 | 2765580 OneTinSoldier66
OneTinSoldier66's picture

His point is that when the convertibility was suspended by Nixon, we were told it was... temporary.

Wed, 09/05/2012 - 10:39 | 2764349 FMR Bankster
FMR Bankster's picture

You could see this coming a mile away. ECB will buy the short end so that Spain can roll over the 30 billion Euros coming due next month. (as well as others as the run spreads) Any real, long term money will only come from the stabilization fund after countries apply and agree to austerity. (which will never be implimented)More kick the can. Northern European countries will push back as hard as they can but in the end won't allow the crash to occur in the short run. Then it will just happen one day. Like Credit Anstalt in 1931 or Lehman in 2008.

Wed, 09/05/2012 - 10:25 | 2764314 machineh
machineh's picture

*MERKEL CAN ACCEPT TEMPORARY ECB BOND BUYING, BARTHLE SAYS*

 

It's alright if we diddle, but no sexual intercourse -- I'm a good girl!

Wed, 09/05/2012 - 10:44 | 2764365 insanelysane
insanelysane's picture

ECB promises to pull out before anything bad happens.

Wed, 09/05/2012 - 10:48 | 2764370 CrashisOptimistic
CrashisOptimistic's picture

EVERY SINGLE DAY.

The sacred functioning of the free market has government intervention overtly intended to manipulate EVERY SINGLE DAY.

Draghi leaks bullshit, Merkel says nein in a carefully crafted non comprehensive way, and the algorithms, whose headline reading expectations have been conveyed to the gov't entities, read what they told them to say and can react "calmly", as if a computer needs to be calm.

Guys, forget the monetary and fiscal stuff.  Money is imaginary.  It was invented by mankind.  It didn't exist a few thousand years ago.

Farmland did.  Oil's BTUs did.  They are truly all that matters.  The rest of this shit is going to fall apart because the fuel for the engine is getting scarce and there is nothing else with value.

Wed, 09/05/2012 - 15:52 | 2765604 OneTinSoldier66
OneTinSoldier66's picture

We could go back to barter only. I'm not necessarily against that myself. However, I know, or at least believe, that if you want to have a modern economy, as compared to a more primitive one, you have to have something that is used for "money".

Wed, 09/05/2012 - 10:55 | 2764401 Rip van Wrinkle
Rip van Wrinkle's picture

Is that a permanent temporary thingy or just a temporary permanent whatsamejig??

Wed, 09/05/2012 - 10:26 | 2764315 rubearish10
rubearish10's picture

Wait, anticipate, act. Wait, anticipate, act. Wait, aniticipate, act. Out to lunch.

Wed, 09/05/2012 - 10:26 | 2764319 fonzannoon
fonzannoon's picture

What a joke. This whole thing is a joke.

Wed, 09/05/2012 - 10:29 | 2764329 TIMBEEER
TIMBEEER's picture

It's like listening to the same old joke for the 50th time in a week. I'm really getting bored of this eurocrap.

Wed, 09/05/2012 - 11:45 | 2764619 slewie the pi-rat
slewie the pi-rat's picture

ain't it just AWFUL???

Wed, 09/05/2012 - 16:01 | 2765640 OneTinSoldier66
OneTinSoldier66's picture

Yes. But I realize it could be worse. But that's the real question to me, is it going to get a lot worse before it gets better?

Wed, 09/05/2012 - 10:30 | 2764333 Deep79
Deep79's picture

i agree. this whole thing has gotten to a point now where i really dont give a shit. Zerohedge should rename it self to Europe Now.

NO ONE is buying this crap, i had a conversation the other day with a guy who knows nothing about markets and he even tells me this whole thing is gonna go.

 

Wed, 09/05/2012 - 10:43 | 2764358 gjp
gjp's picture

The US is immeasurably worse.  In Europe they are at least talking about their problems (admittedly in endless unproductive circles).

Here, it's empty bullshit about family values, hope and change, and empty chairs while the plutocrats rob everybody blind.

Wed, 09/05/2012 - 11:02 | 2764422 FoxMulder
FoxMulder's picture

Take my bonds....please.

Wed, 09/05/2012 - 10:35 | 2764344 rubearish10
rubearish10's picture

Groundhog Day, forever! Ooops! Redundant.

Wed, 09/05/2012 - 10:59 | 2764374 BlackholeDivestment
BlackholeDivestment's picture

...yes, it is an U.N.Forgettable New World Order joke

                         if  

                            you are watching 

      http://www.youtube.com/watch?v=WPlt2DWN8O4

                                     and

           getting your butt kicked in the Fight Club

                                  called

 mark to myth market makers mark of the beast market

                                   for

                 mmm mmm mmm Muppets

       http://www.youtube.com/watch?v=GXLfTv42T8A  

                              where

         everyoneis is as slow as The Comedia is

                                 to

Algo Pharaoh's Supreme Court Command Rule

                           ''Change'' 

      http://www.youtube.com/watch?v=KMuJiqou4ek

Wed, 09/05/2012 - 10:47 | 2764376 Dr. Engali
Dr. Engali's picture

I think they do it on purpose to drive us nuts...hoping people will slip back into the matrix.

Wed, 09/05/2012 - 16:13 | 2765667 OneTinSoldier66
OneTinSoldier66's picture

Ding ding ding!

 

Yep, it's the only hope they have to keep the debt slavery ponzi scheme going. They don't want people to think or realize they have another choice(s).

Wed, 09/05/2012 - 10:27 | 2764323 Let The Wurlitz...
Let The Wurlitzer Play's picture

Its good to see that Germany is rewarding bad behavior.

 

Wed, 09/05/2012 - 10:46 | 2764369 insanelysane
insanelysane's picture

Because every other country is going to want whatever you are giving Greece, and Spain, and Italy, and France, and.....

Wed, 09/05/2012 - 11:20 | 2764434 Donnie Duvanie
Donnie Duvanie's picture

Note to self: "Start own country and apply to the ECB or a measly billion."

Wed, 09/05/2012 - 10:28 | 2764325 bnbdnb
bnbdnb's picture

Who cares, its AAPL/IBM prop day.

Wed, 09/05/2012 - 10:28 | 2764328 disabledvet
disabledvet's picture

Full fledged capital flight has been underway for so long now it's amazing there's any money left.'obviously "asset flight" has been underway for some time as well...

Wed, 09/05/2012 - 10:37 | 2764347 A Man without Q...
A Man without Qualities's picture

The money doesn't just vanish.  It gets taken out of the Spanish bank and deposited with the German bank, which they deposits it at the Buba, which sends it to the ECB which sends it back to the Bank of Spain, who lends it to the Spanish bank.  Everything balances but it is so interdependent, there is simply no way they can unwind this mess...

Wed, 09/05/2012 - 16:14 | 2765675 OneTinSoldier66
OneTinSoldier66's picture

Sounds like a circle jerk if I ever heard of one.

Wed, 09/05/2012 - 10:30 | 2764334 ParkAveFlasher
ParkAveFlasher's picture

Thanks to ZH for posting these updates in the whirlwind manner which they seem to be coming in, offering critically precise commentary, mining these comment threads for the large volume of insightful (and inciteful) commenting, and generally making my slow work days worth being awake for.

Wed, 09/05/2012 - 10:36 | 2764346 vertexa
Wed, 09/05/2012 - 10:42 | 2764355 GetZeeGold
GetZeeGold's picture

 

 

The loot was on sale!

 

Wed, 09/05/2012 - 10:54 | 2764395 machineh
machineh's picture

Five finger discount, bitchez!

Stick it to El Hombre.

Wed, 09/05/2012 - 10:48 | 2764361 LawsofPhysics
LawsofPhysics's picture

Now ask yourself, why would any commoditiy supplier continue to supply to that store.

Let me say it again;  The paper-pushers and finacial families will continue to rob you, they have been here before and trained their children well to continue to extract their rent from the real value of your labor.

 

Nothing, and I mean nothing will change until producers start to default on contracts to deliver real goods and services.  Then shit gets real in a hurry.

Hedge accordingly.

Wed, 09/05/2012 - 10:41 | 2764354 A Man without Q...
A Man without Qualities's picture

It's funny how we should even expect the two to react in the same way.  Equities are priced according to how the central planners would like the economy to be doing, and sovereign debt is priced as though the whole thing is on the verge of collapse.  The two markets diverged so long ago, they exist in seperate universes...

Wed, 09/05/2012 - 10:44 | 2764363 debtor of last ...
Wed, 09/05/2012 - 10:46 | 2764372 YesWeKahn
YesWeKahn's picture

Drugie: we buy unlimited, market rally

Merkel: we don't buy unlimited, market rally

drugie: it's unlimited, market rally again

Merkel: no unlimited, market rally again.

Wed, 09/05/2012 - 10:55 | 2764402 machineh
machineh's picture

Droogie: 'All your junk bond are belong to us!'

Wed, 09/05/2012 - 10:54 | 2764373 Dr. Engali
Dr. Engali's picture

You know what Merkel...why don't you be a leader? When somebody says you support something you don't ,call the fuckers out. This is beyond ridiculous.

Wed, 09/05/2012 - 10:49 | 2764378 jexp
jexp's picture

If ECB sterilizes the bond purchases by offering interests on deposits from banks (and this probably is the only realistic way of accomplishing sterilization), that would effectively ease liquidity for governments at the cost of private sector liquidity, since banks will become less incentivized to lend. I'm guessing that will make recessions worse, so it makes sense that euro stocks would drop while sovereign yields fall.

Wed, 09/05/2012 - 11:21 | 2764517 falak pema
falak pema's picture

9 trillion worth of Spanish and Italian bond holders on the tenterhooks of Draghi spaghetti machine.

What a western; the good, the bad and the ugly german duckling; 999! 

Dial 999! If you want your 9 trillion bonds to burn like summer grass.

The club of Paris replaces the club of Rome as the navel of debt write-offs! 

Paris is the place where the italian loan redemption dreams come to die. Rome is the place where the eiffel tower of eurohopium reaches monumental heights. Frankfurt is the place where they make a famous sausage full of other people's garbage! 

Its a topsy turvy world!  JPMorgan: The ECB May Have To Engineer A Massive Debt Renegotation And Take Huge Losses. Interesting take...(re, as already posted on ZH).

JPMorgan: The ECB May Have To Engineer A Massive Debt Renegotation - Business Insider 

Wed, 09/05/2012 - 11:23 | 2764530 Cow
Cow's picture

There's nothing as permanent as a temporary government program

Wed, 09/05/2012 - 11:25 | 2764538 This is the end
This is the end's picture

What a surprise! Merkel is now open to "short" term bond buys. Wasn't it, what, 6 months ago she was against the ECB buying bonds? Give her another 6 months and she will be okay to the ECB buying long-term bonds. She is Bernanke's twin. We have rewarded her for stringing us along. Bernanke, Drahgi, China, whoever they will all print and devalue their currencies until they disappear. And why not? When they print they literally are allowed to steal money from you and put in the governments' hands. They will do this relentlessly until they cannot. They do not care about "independence", elections, food prices, energy costs, inflation or any other havoc they have and will wreak on the world with their stealing. Do not listen to Merkel! She is going to print as many euros as she can until we decide to stop accepting the BS. And Bernanke will print as many dollars as he can until we stop putting up with it...They are probably amazed we keep listening to them bs us!

Wed, 09/05/2012 - 12:49 | 2764807 Chuck Mentzel
Chuck Mentzel's picture

I get the feeling Draghi and Merkel are doing this on purpose; they're playing at both ends of the same charade. One promises limited bond-buying, the other one unlimited willlingness to limitedly intervene in the markets.

This keeps everyone busy thinking Europe is in control of the situation on both accounts: fiscal responsibility and debt payment. But in fact, it's just a paper charade.

Wed, 09/05/2012 - 13:55 | 2765129 Pancho Villa
Pancho Villa's picture

Europeans seem to be very skilled at playing "kick-the-can". Maybe it is all that soccer they play.

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agagshoes's picture

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