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Gold Outperforms But Hilsenrath-Rally Fails, As VIXophrenic Equities Converge To Bonds YTD

Tyler Durden's picture




 

Pathetic. A late day surge to test yesterday's lows and VWAP (which makes some technical sense) was buoyed by positivity from yet another Hilsenrath 'hint'. The total lack of response in the afternoon as German and Spanish FinMins tried to jawbone us up was the reality. We do note though that all the 'Hint' managed to do was get us back to VWAP - which suggests that 'the force is weakening with this one'. The S&P 500 and the 30Y Treasury Bond almost converged in performance year-to-date today as the entire TSY complex saw new all-time record low yields (bullish?). Gold put in a decent surge to the highs of the day into the close (but remains fractionally lower on the week - which is decent considering the USD is up 0.55% on the week). Copper lost ground but Oil and Silver ended unch though well off their lows. VIX closed at one month highs, reversing yesterday's malarkey ending the day 20.4% up around 1.75vols and much more in line with equity/credit. The Hilsenrath-rally helped steer financials to the best performers on the day (though still -0.3%) but as soon as cash closed ES limped back down. SPY pushed well ahead of its ETF peers into the cash close but in general ES caught down to broad risk-asset dysphoria. Now everything hinges on CRAAPL.

YTD equities and bonds have converged...

 

The Hilsenrath-rally drove cash equities nicely into the close - upper left chart - but rates/vol/credit did not follow suit. VIX finally pushed up and met its equity/credit-implied reality (lower left chart) and stocks caught down from their late-day surge yesterday with broad risk assets (upper right chart) and cross-asset-class correlation (while noisy) has picked up more systemically...

 

Meanwhile, ES managed to test yesterday's lows and VWAP (thank you Hint-enrath) but then failed and turned lower...and just to be clear - once we hit VWAP, heavy and large block size selling volume hit the tape - surprise!! ES also managed to escape the dreaded close below 50DMA

 

with Gold the only winner on the day...

 

Charts: Bloomberg and Capital Context

Bonus Chart: GM hit $18.85 at its lows today, and as we noted earlier the market is seeing straight through all the channel-stuffing. What is most peculiar is that OLDGM fell off its cliff at $18.83 and never looked back until bankruptcy - what a happy coincidence...

 

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Tue, 07/24/2012 - 16:28 | 2646876 financial apoca...
financial apocalyptic contagion's picture

chart porn

Tue, 07/24/2012 - 16:30 | 2646880 Dr. Engali
Dr. Engali's picture

"OLDGM fell off its cliff at $18.83 and never looked back until bankruptcy - what a happy coincidence..."

 

 

There are no coincidences.

 

Tue, 07/24/2012 - 17:33 | 2647219 RSloane
RSloane's picture

Clearly this just means they need more tax payer dollars, amirite?!?

Tue, 07/24/2012 - 16:31 | 2646887 Dr. Engali
Dr. Engali's picture

Gold bitchez!

Tue, 07/24/2012 - 17:36 | 2647231 Snidley Whipsnae
Snidley Whipsnae's picture

Plus Many!

Ya think the Fed would like the Chinese gold support to collapse? :)

Interesting articles that would have qualified as a humorous April Fool's Joke a few years ago...

"Coming: The End of Fiat Money"   Barrons

"It's Time For a Bank Holiday In Europe"   Forbes

Wed, 07/25/2012 - 05:44 | 2648278 jeff montanye
jeff montanye's picture

yes, i thought the same.  i was stunned when i saw jesse's references to them.  forbes and barrons.  even though these points of views are obviously contrarian and minority now, that they get in to such msm is a sign, imo, of the growing strength of at least parts of the critique dominant here.  next stop gata in the wsj (interview not ad)?

Tue, 07/24/2012 - 16:31 | 2646888 stocktivity
stocktivity's picture

When's the Apple bullshit coming out?

Tue, 07/24/2012 - 16:34 | 2646903 ihedgemyhedges
ihedgemyhedges's picture

It's out.  Miss earnings and revs.  MAN OVERBOARD!!!!!!!!!!!!!!!!!

Tue, 07/24/2012 - 17:46 | 2647252 Mugatu
Mugatu's picture

Nothing matters anymore - even earnings don't matter.  Market will scream for QE whenever equities are down more than 1%. Its pathetic that the greatest market it the world is now held hostage by a group of groupthink economists who think they are smarter than nature.  The Fed actually thinks they can "fool the system" into being healthy again.

It is becoming very easy to see why QE failed in Japan.  QE causes everyone to periodically put everything on hold as we all wait for the next flush of cash into the system.  As soon as it looks like any new cash flush is weakening, everyone pulls back and waits for more.  We then repeat this cycle over and over again.  Obviously an economy can neverget on track when it crashes to a halt, lunges forward, then crashes again.

This shit is getting old.  Just imagine how bad the Japanese must feel after 20 years of QE.

 

 

Wed, 07/25/2012 - 00:31 | 2648067 Plausible Denia...
Plausible Deniability's picture

Exactly right!!! Well said. I have said it before, I will say it again. This website makes me feel sain. I flet like a lone voice in the wilderness, like I must be way off.

Anyone think its a coincidence that the Fed made that little announcement on the same day Apple (the earnings the street was waiting for) announced a big miss? Its really a shame. Our markets used to be so efficient. They were a wonderful discounting mechanism. Sure, they had their momentary irrationality, but nothing like this. They are broken. Completely broken.

But, let's not forget that stocks are cheap. LMFAO!!! All the experts keep citing the 12.1 PE average and argue that it should equal the average of 14-15 over the past 30 years. During that same time period we averaged about 4% growth. Now we are at 1.5 and we should have PE's at 15?? Am I missing something???

Wed, 07/25/2012 - 05:54 | 2648281 jeff montanye
jeff montanye's picture

one thing that doesn't get as much attention as perhaps it deserves (i modestly note) is that for the long run from ww2 to maybe the '87 crash and partially even until the end of the credit cycle in 2008, recessions were fed engineered.  the old "taking away the punchbowl" in the long inflationary cycle that ran from '42 to '82 (and long treasury rates from about 2% to 16%) and even well into the "sweet part" of the disinflationary/deflationary cycle.  however now, imo, events are taking away the central bankers' control (and of course they hate and fear that).

Tue, 07/24/2012 - 16:33 | 2646896 fuu
fuu's picture

Paging bastiat009, Mr. 009 please pick up the gold courtesy phone.

Tue, 07/24/2012 - 17:05 | 2647122 Bastiat009
Bastiat009's picture

I'm here, I'm here. Nice day for paper gold or is gold only paper on down days? To be honest, paper gold is still lower now than it was on Sunday.

And to be completely fair, gold is holding up against the dying euro.

Tue, 07/24/2012 - 17:26 | 2647194 fuu
fuu's picture

YAY!

I have no idea what paper gold did today, I don't even look at it.

Also, well played.

 

Tue, 07/24/2012 - 16:34 | 2646902 PhattyBuoy
PhattyBuoy's picture

Does Hilsenwrath (anyone) have a stick save for Europe's ongoing collapse ... probably not.

Tue, 07/24/2012 - 16:34 | 2646905 HD
HD's picture

The desperation in the voices of those on CNBC every time QE is mentioned is beyond transparent.

Tue, 07/24/2012 - 16:35 | 2646911 SheepDog-One
SheepDog-One's picture

NASDAPPLE MAYDAY MAYDAY!

Tue, 07/24/2012 - 16:38 | 2646954 youngman
youngman's picture

I bet China buys GM...what a feather that would be in Obama´s cap......

Tue, 07/24/2012 - 17:28 | 2647201 ReactionToClose...
ReactionToClosedMinds's picture

hilarious ....

Tue, 07/24/2012 - 16:46 | 2647020 lasvegaspersona
lasvegaspersona's picture

AAPL

THE NEW AND OBVIOUS NASH EQUILIBRIUM

GOLD? nah...no one to back it up...

Tue, 07/24/2012 - 16:55 | 2647063 orangegeek
orangegeek's picture

Gold and Gold Bugs Index (stocks) diverging. 

 

http://bullandbearmash.com/index/gold/daily/

 

 

Tue, 07/24/2012 - 17:14 | 2647151 q99x2
q99x2's picture

I want my money back I promise to leave the country. You can keep GM and Obama.

Tue, 07/24/2012 - 17:36 | 2647227 ReactionToClose...
ReactionToClosedMinds's picture

Query:  why would Hilsenrath or Fed care about 50DMA?  Forget the obviousness of it all, why risk 'credibility' to claw above?   This is a 2nd or 3rd level inquiry ...what are they working to use up a 'credibility' chip?  Best I can do is 'buy time' ....  for what I do not know .......

Wed, 07/25/2012 - 00:39 | 2648081 Plausible Denia...
Plausible Deniability's picture

I keep asking myself the same thing. The best I can come up with is this: Its all they can do. They are just hoping that some of these head winds work themselves out. They feel they are backed into a corner and know that things are as bad as we are saying. Same as Europe. There is nothing else to do. No one has the 4.5 trillion needed to bailout Europe. All they can do is kick the can and hope something breaks loose.

Wed, 07/25/2012 - 01:03 | 2648112 ReactionToClose...
ReactionToClosedMinds's picture

maybe totally unconnected (but maybe not) .. but China is making some strong acquisition moves lately (Credit Agricole investment banking biz in Asia pick-up ... a good smart, acquisition, Canadian energy, etc. ... 2 in one day ... what is next?).  I may not be gung-ho PRChina but they are doing smart things.   Knocking off our F-22 whele we shut it down (including all the accumulated know-how behind it) forever, etc.

Maybe Jim Rodgers is correct ... better to learn mandarin willingly versus force-fed.  I respect PRChina ... I do not want to be 'like' PRChina ... a very big difference

Tue, 07/24/2012 - 18:37 | 2647369 EclecticParrot
EclecticParrot's picture

A humid early Tuesday morning, air stagnant like sultry sheets hung out to dry as Jon Hilsenwretch quickly descends the stairs of a medium rise apartment building and hits the pavement in an instant trot.

"Jon !!!" screamed Mr. Algo from a 5th story window toward the street below.  "Wait, Jon !! You left your keys on my night stand again !"

Tue, 07/24/2012 - 18:36 | 2647372 notadouche
notadouche's picture

Someone correct me but I thought GM stopped Volt production because of lack of interest and electical problems yet over the last couple of weeks I've seen many commercials about the Volt and how the customer never goes to the gas station and "it's been so long I forgot how to put the gas in".   Are they actually selling these things or are these cmmercials political as I suspect?

Tue, 07/24/2012 - 19:03 | 2647420 chump666
chump666's picture

Fed/Govt sponsored HFTs, I am not one for conspiracy theories, but that seems very likely seems the Fed are obsessed with supporting stocks that has 0 to do with the real economy, which is f*cked beyond f*cked.

In saying that HFTs rely on larger players buying in, risky bet, still lock in a major crash in Aug.  Market is sick and dying

 

Tue, 07/24/2012 - 19:08 | 2647433 spekulatn
spekulatn's picture

That bonus chart is bullshit. GM was saved. I know because I read it in the WashPo. 

 

//Sarc off

Tue, 07/24/2012 - 19:10 | 2647437 mendigo
mendigo's picture

Apple misses so tommorow should be limit green.
Apple is the surragate for all that we aspire to be.
This time there will not be bread lines...

Tue, 07/24/2012 - 23:08 | 2647886 NOTfromSanFrancisco
NOTfromSanFrancisco's picture

 

 

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