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Futures Soar On...US-Chinese Trade War?

Tyler Durden's picture




 

As often happens the case on up market days, the futures have managed to creep up higher in the overnight session, driven primarily by a rise in the EURUSD. This in turn has been pushed modestly up by the usual rhetoric BS: on one hand EU’s Rehn said there is a fairly good chance of averting a European calamity; on the other hopes for expanded EFSF remain intact as Slovakian leaders ready to meet to lay groundwork for another vote after rejecting bill first time (mind you nothing but hopes). Yet the biggest drive of futures being up is... the outbreak of trade war between China and the US! That's right, an event which in anything but the ultra-short term is disastrous for risk assets as it is nothing short of complete Nash Equilibrium collapse, is pushing ES double digits higher simply because it is forcing the USD lower. As Bloomberg's TJ Marta writes in a note, the USD is down 1 to 2+ standard deviation versus most major currencies overnight after U.S. Senate passed legislation aimed at punishing China for keeping its currency undervalued; GBP/USD +2.0 std. devs., 1.2% overnight; has broken to high since Sept. 19; slow stochastics are rising from oversold levels, supporting continued rally. Only significant correlation during the past 90 days, S&P500, has rallied and supports strength in cross; next technical resistance overnight high and support during July at 1.58, and then 1.59, which held as support  during Feb., March, June. Yet the most important push has been seen in the EURUSD which has done one of ye olde 200 pip moves higher on nothing but hope (because it certainly isn't the third failed Bund auction in a month) and deterioration in the dollar's status, because apparently a collapse in China-US trade relations is beneficial for Europe... So sit back, wait for Barroso to address the parliament expressing his hope for hope for hope, and watch as the EURUSD melts up taking stocks higher with it as China and the US accuse each other of starting the Second Great Depression.

 

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Wed, 10/12/2011 - 07:18 | 1764868 zorba THE GREEK
zorba THE GREEK's picture

I guess it is true, war is bullish.

Wed, 10/12/2011 - 08:24 | 1765022 oh_bama
oh_bama's picture

DID I TELL YOU GUYS BTFD A FEW DAYS AGO??

Wed, 10/12/2011 - 08:36 | 1765044 SheepDog-One
SheepDog-One's picture

I wouldnt touch this whore market with YOUR dick!

Wed, 10/12/2011 - 07:21 | 1764871 GeneMarchbanks
GeneMarchbanks's picture

Somebody somewhere is printing and/or selling the greenback like gangbusters. I have no causal attribution here. Clueless.

Meanwhile Au overtaking cocaine:

http://www.bloomberg.com/news/2011-10-12/gold-eclipses-cocaine-as-rebels...

Wed, 10/12/2011 - 07:43 | 1764931 duo
duo's picture

you can't snort gold

Wed, 10/12/2011 - 08:05 | 1764979 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

But you can stick it up your ass... at least 10 krugerrands, proven!

Wed, 10/12/2011 - 08:34 | 1765040 Manthong
Manthong's picture

Maybe not so good for the mucous membranes, but you can gild your digestive tract.

http://www.cockeyed.com/inside/goldschlager/goldschlager.html

Wed, 10/12/2011 - 07:21 | 1764874 disabledvet
disabledvet's picture

the Chinese are afraid their (trillion dollar) investments in Fannie and Fred are money bad. Should they be? Right now they're pumping massive liquidity to shore up their banks and keep their housing bubble going. Sound familiar? Sounds like going from a "teachable moment" to a "learnable one."

Wed, 10/12/2011 - 07:25 | 1764883 Ivanovich
Ivanovich's picture

Secong Great Depression - is that some Freudian slip?

Wed, 10/12/2011 - 07:26 | 1764884 YesWeKahn
YesWeKahn's picture

I told you so, everything is bullish (bullshiet)

Wed, 10/12/2011 - 07:48 | 1764947 EscapeKey
EscapeKey's picture

FTSE up 0.42% despite this - I feel as if I'm taking crazy pills.

 

http://www.bbc.co.uk/news/business-15271800


UK unemployment total reaches 17-year high

Wed, 10/12/2011 - 07:26 | 1764885 eigenvalue
eigenvalue's picture

Maybe the real reason is that today is the first day of the global liquidity bailout.

http://www.zerohedge.com/news/global-liquidity-bailout-arrives-ecb-announces-emergency-liquidity-providing-operations-conjunc

Wed, 10/12/2011 - 08:00 | 1764972 TooBearish
TooBearish's picture

great call

Wed, 10/12/2011 - 07:27 | 1764887 Cassandra Syndrome
Cassandra Syndrome's picture

But the USD declining decreases the chances of QE3, do I have to write that out 33,000 times for Skynet to notice?

Wed, 10/12/2011 - 07:28 | 1764889 YesWeKahn
YesWeKahn's picture

Good for solar stocks?

Wed, 10/12/2011 - 07:28 | 1764891 John Law Lives
John Law Lives's picture

Don't forget that Alcoa laid a royal egg by badly missing Q3 EPS as announced yesterday. That should be worth +100 on the DJIA now that the uncertainty re. them missing badly has been removed...

http://www.bloomberg.com/news/2011-10-11/alcoa-s-profit-misses-estimates...

100% FUBAR.

Wed, 10/12/2011 - 07:29 | 1764893 Blueangels
Blueangels's picture

Subordinated bonds in Euro are strong few days now, some retail buying and short covering.

 

Wed, 10/12/2011 - 07:29 | 1764895 GolfHatesMe
GolfHatesMe's picture

This is just awesome.  What the hell do I have to do to have my common sense removed, so I can figure this shit out.  Every day I am totally amazed at what happens.  Don't know if there will ever be a time where you can analyze a company based on fundamentals.  I can't stand trying to react/figure out what the HFT assholes are doing to each other playing finanacial paintball.  There really is no way for someone to get kicked out of the secret handshake club.  Otherwise, Mary Shapiro, Eric Holder, and all of the other derelicts would be gone.  We appear to have an amazing amount of rug to sweep this shit under.  What the hell is it going to take to get these freaking toothpicks that are holding this market up to collapse already!  Here's hoping Slovakia is the Euro Leeeeeerrroooooy Jenkins! 

Wed, 10/12/2011 - 07:33 | 1764904 John Law Lives
John Law Lives's picture

Neither our elected politicians nor our Federal Reserve Board know how to create jobs and grow the economy organically. Therefore, they result to artificial stimulus and market-propping measures. Pumping the money supply and pumping the markets are the only tricks they know.

Wed, 10/12/2011 - 07:33 | 1764905 urbanelf
urbanelf's picture

Bullish.  It removes the uncertainty of how 1.6 billion people will die.

Wed, 10/12/2011 - 07:34 | 1764907 duo
duo's picture

China should announce that they will buy all the gold and silver anyone in the world will sell at $3000 and $200/oz.  That should finish off JPM and a few other banks.  Then, when China has 4-5 tons, back their currency with gold,  The next day OPEC will only take gold or yuan for their oil, and bam!, American economy destroyed without firing a shot.

In the resulting chaos, China gives a permanent visa to any American showing up at a Chinese embassy with 100oz or more of gold.

Wed, 10/12/2011 - 07:44 | 1764933 SilverIsKing
SilverIsKing's picture

Once they would make such an announcement, barring the US Govt reaction, which would be swift and unpleasant, the dollar would tank so badly and I doubt any amount of FRNs would be acceptable to anyone for their PMs. Thus $3,000 and $200 won't cut it.

Wed, 10/12/2011 - 07:46 | 1764940 bjennings
bjennings's picture

And bam!  China can say goodbye to their largest customer and, with Europe not far behind, to their second largest customer and with that goodbye to their economy.  I dunno -- Doesn't seem likely.

Wed, 10/12/2011 - 07:57 | 1764966 duo
duo's picture

When the status quo (competing fiat monetary systems and mercantilism) ends, I have a feeling China will be in the best shape, if only because they have a plan for this eventuality (at least a plan that looks out more than 3 months or to the next election cycle).  The US government will take this misfortune out on the 99%.

Wed, 10/12/2011 - 08:25 | 1765023 EscapeKey
EscapeKey's picture

the chinese consumer has very little debt, and lots of savings

the american consumer has lots of debt, and very few savings

somehow, I don't see China being in the worse position here. Yeah, the Chinese economy will undergo a severe recession, but the American will completely crash.

Thu, 10/13/2011 - 01:20 | 1765066 Manthong
Manthong's picture

I think Europe is actually their largest customer.

Maybe we're more like the alcoholic spendthrift spouse... they just keep putting up with our crap until they don't.

Wed, 10/12/2011 - 07:53 | 1764958 GoldBricker
GoldBricker's picture

Unlikely to happen. China is not holding stacks of benjamins like some gang boss, but rather treasuries, agencies, corporates, and other such dreck in electronic form. The US knows exactly which bonds are held by China.

If they pull the plug on the dollar too fast, America has only to declare them 'hostile' and confiscate their bonds with the stroke of a pen.

Instead, China is trying to dump the dollar by stealth, buying up domestic gold production and encouraging their citizens to buy the stuff as well. Also by striking resource deals with flaky countries, facilitatated by currency swaps.

Wed, 10/12/2011 - 07:50 | 1764911 TradingJoe
TradingJoe's picture

THEY NEEDED A REASON TO TAKE OUT 1200 IN THE S&P THEN 1220 AND SO FORTH, THERE IS NO MORE BELIEF LEFT FOR A HAND OUT THIS YEAR SO THEY ARE TRYING TO GET IT AS HIGH AS POSSIBLE TO SHORT IT FROM MUCH MORE FAVORABLE LEVELS, AFTER ALL NOT MANY SHORTS LEFT AFTER THESE MASSIVE MULTI DAYS SQUEEZE! IT WILL BE OVER IN A FEW DAYS!!

And..we are short term overbought! If this still is somehting that matters, anymore?!?!

Wed, 10/12/2011 - 08:09 | 1764989 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

This is what fascism looks like. You're lucky enough to be seeing it first hand instead of reading about it in a history book... what interesting times.

Wed, 10/12/2011 - 08:46 | 1765070 Esso
Esso's picture

Interesting times?

I think they just kind of suck.

Wed, 10/12/2011 - 07:37 | 1764916 HomerToeclipper
HomerToeclipper's picture

Just wait guys, the second I get back in the market, the massive complex computer network at GS will register this and communicate that the last goddam sucker on earth has entered the market and it is finally time to take it all down hard and fast.

Wed, 10/12/2011 - 07:46 | 1764938 SilverIsKing
SilverIsKing's picture

Just buy Friday before the close.

Wed, 10/12/2011 - 07:39 | 1764920 Mike in GA
Mike in GA's picture

The Chinese may be smart enough to refrain from taking overt action to achieve "...complete Nash Equilibrium collapse..." as they watch the US - and Europe, implode unilaterally.  Unlike our present CONgress, the Chinese won't cut their nose off to spite their face. 

(Will they?)

Wed, 10/12/2011 - 07:46 | 1764930 DormRoom
DormRoom's picture

a low US dollar will only push up commodity prices, and further driver inflationary pressures in China, forcing more investors into the shadow banking industry.

 

But in the developed world the low USD will lead to stagflation as input cost rises (see Alcoa missed earnings), and structual employment remains, given the mismatch in skills, and the employment friction inherent in a knowledge based economy,  in which you need higher, and higher education to be employable.

 

This house of card is coming down in 24-48 months.  And the economic adjustments will break all economies; developed and emerging.

 

Dec 2012 really will be the year the world ends.

Wed, 10/12/2011 - 08:11 | 1764991 SmoothCoolSmoke
SmoothCoolSmoke's picture

No offense, but I'm tired of losing money on the fact that the world economy is going to implode in the next XXXX.

Wed, 10/12/2011 - 10:01 | 1765400 DormRoom
DormRoom's picture

"the markets can stay irrational longer than you can stay solvent"  --Keynes.

 

 

Wed, 10/12/2011 - 07:47 | 1764941 YesWeKahn
YesWeKahn's picture

tmv is up

Wed, 10/12/2011 - 07:49 | 1764948 MiningJunkie
MiningJunkie's picture

Futures soared because the entire world is listening to the Pollyana's carping about Euro-horror and China-War and "Banksters" and blah blah blah and are MASSIVELY SHORT when all you have to look at is that the PRINTING PRESSES are on FULL - GLOBALLY.

Never underestimate the replacement power of equities within a hyper-inflationary spiral on a GLOBAL scale.

Sell cash (like Pimco), short cash (like me) and own ANYTHING else, preferably good companies that produce ever-diminishing supplies of resources (including oil, gold, silver and copper).

Keep whining about fraud and collusion and misallocations and stay short and watch your wealth disappear. Rothschild said it best - control the currency and you control the people. They are debasing currencies on a GLOBAL scale. Ergo, you must jettison cash which is the REVERSE of being short.

Wed, 10/12/2011 - 07:53 | 1764957 TradingJoe
TradingJoe's picture

Good luck to you Bubba, you're gonna need it!

Wed, 10/12/2011 - 08:22 | 1765016 sabra1
sabra1's picture

God said, " i damn you Rothchild and cohorts to hell!" "i created this world for all to share, not to make you henchmen to deprive my sons and daughters to live hell on earth!" "YOU WILL BE DAMNED!!!!" 

Wed, 10/12/2011 - 07:56 | 1764965 Scipionz
Scipionz's picture

This is transitory...

Wed, 10/12/2011 - 08:01 | 1764974 Ewe235
Ewe235's picture

HomerToeclipper, just send me a text right before you go all in.

Wed, 10/12/2011 - 08:06 | 1764982 msmith
msmith's picture
Equities should reverse at some resistance leveles ahead.  Here is a look at the DX, GC, and the EURUSD.  With the SPX nearing a pullback soon, the DX and EURUSD are also showing reversal potential for the short term.  http://bit.ly/pm0tLD
Wed, 10/12/2011 - 08:06 | 1764986 lizzy36
lizzy36's picture

Soared because Shanghai closed up 3%

After being down 1.25% on the open the PBOC stepped in and intervened very heavily on the Shanghai stock exchange, buying Chinese banking stocks in particular.

The question is why does the PBOC feel it necessary to intervene so heavily in the stock market in particular? Things that bad?

Stay tuned kiddies, have a feeling this story is just starting to get interesting;)

 

Wed, 10/12/2011 - 08:15 | 1764998 SmoothCoolSmoke
SmoothCoolSmoke's picture

No offense, but been "tuned in" for 12-18 months now, the story always promises to get real interesting.....but rarely does, despite many assurances it will.

Wed, 10/12/2011 - 11:33 | 1765905 slewie the pi-rat
slewie the pi-rat's picture

duelling PPT interventions

china mkts looking just as sweet as any of the revlon'd sows in the "kiss my fuking pig!" competition

actual "participation" in markets might be a little thin due to not wanting to get crushed by careening steam-rollers, but the banksters and fiat meisters & meistresses are certainly trying to get "investors" interested in risk---theirs!

Wed, 10/12/2011 - 08:34 | 1765038 No Mas
No Mas's picture

Why aren't the markets tanking, asks ZH.  They should be tanking, I mean we are right aren't we?  The world is ending isn't it?  The TD sheeple write the end of times is here, TODAY!!!  Well, not today but TOMORROW!!!!  Well, it should be dammit but those bastards (the rest of the world) just won't stop living, loving and doing stuff.  Don't they know Greece is on fire?  What, it isn't on fire?  But it has to be!!!!  TD said so!!!  Wait, what about that $10 loaf of bread TD wrote about in Nov 2010?  That'll show the bastards!  What?  You mean bread is nowhere near $10 a loaf anywhere in this country?

Could it be that like all sheeple, those addicted to the doomsday scenario spewed forth every day by TD, are just well conditioned idiots with a different hook?

Listen, I will tell you what TD will not:  Things are not going to fall apart.  Some bad things will happen, some good things will happen, but you guys will wake up next year to a Europe and China and US and South America that is living, loving and doing stuff.

But perhaps some progress is being made within the world of ZH.  Little is now written about building bunkers and storing food and living off the land as civilization collapses all around.  The groundhogs and gold bugs are squinting into the light of reason and logic.  The primordal emotion of losing mother is being tempered.  Perhaps TD themselves are coming to terms with the long past break of their maternal bonds.

Have a nice day.  The world will still be turning when you wake up tomorrow :)

Wed, 10/12/2011 - 08:39 | 1765049 SheepDog-One
SheepDog-One's picture

Kill the dollar.....Save America....Kill the dollar....

Wed, 10/12/2011 - 08:46 | 1765071 Archimedes
Wed, 10/12/2011 - 08:48 | 1765075 Manthong
Manthong's picture

“legislation aimed at punishing China”

That’s rich.

     So who’s the dom.. Hillary or Barney?

 

Wed, 10/12/2011 - 08:48 | 1765080 Escapeclaws
Escapeclaws's picture

American sentiment against the euro: good contrary indicator. Why just in the last week we've been hearing about how the euro is going to parity with the greenback (gloat, gloat) in a short while. About how those idiot Europeans, unlike us, will not be able to mount a credible response to their financial crisis. About how the whole EU project is a poorly rigged structure doomed to failure. So naturally the euro begins climbing.

It is almost like a divorce. Every time it looks like the opposing party is going to fall on hard times, the dire predictions and the gloating fires up. But sometimes it could just be jealosy. Americans may not know how much better life is in Europe, but we do have enough of an inkling of that to hope for the worst for the Europeans. Hopefully, their whole house of cards will soon come tumbling down and they too will have no health care and other benefits that make life so much more bearable there--not to mention better food, beautiful cities, better infrastructure and a more civil society. Better that we don't know that, or we would probably have to bomb them instead of Iran or China. At any rate, we can use our rating agencies against them.

Wed, 10/12/2011 - 09:15 | 1765136 omi
omi's picture

161.8% Fibo-extension off clean bounce @81

http://i.imgur.com/1Alfw.png

 

 

Wed, 10/12/2011 - 09:22 | 1765161 rambler6421
rambler6421's picture

That's your govt in action.....plunge protection team baby. 

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