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Guest Post: Stocks And Credit In Full Disconnect Mode

Tyler Durden's picture




 

From Peter Tchir of TF Market Advisors

IG16 is 129.5, 3 bps wider.  MAIN is 170 +5.  XOVER 720 +22.5  (this was 580 last week at the tightest level).  SOVX is 308 +10 and Fins (an index of European financials) is at 260 +10 and the version referencing sub debt is 458 +21.  BAC is getting close to 400. 

Not only are all the spreads wider, the bid/offer is abysmal. The market has lost any semblance of provding true liquidity.  It is broken enough that it wouldn't take much volume to push the indices tighter, but on the other hand it is hard to figure out why stocks are heading higher, so obliviously.

It is not only the CDS market that is struggling.  The cash bond market is at a virtual standstill.  Bids for bonds have dropped and so far, sellers haven't yet given up hope and hit the much lowered bids, but it doesn't feel like it would take much for that to happen as the market is teetering.

It is interesting how many investors talk about credit leading the markets, but choose to ignore it when they see it.

Maybe the 10 am economic releases will help the market?  Personally I find that hard to believe.  Has it really come down to the point that Bernanke is carrying the entire investment world on his shoulders?  Scary thought. 

 

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Tue, 08/23/2011 - 08:52 | 1589678 Tense INDIAN
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the more the disconect , the more violent the down moves...

Tue, 08/23/2011 - 09:05 | 1589726 slaughterer
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"Has it really come down to the point that Bernanke is carrying the entire investment world on his shoulders?"

Bernanke's summer reading: ATLAS SHRUGGED. 

Tue, 08/23/2011 - 08:54 | 1589686 mynhair
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Blue Momo luvs the Bernank.

Tue, 08/23/2011 - 08:57 | 1589687 dwdollar
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"Has it really come down to the point that Bernanke is carrying the entire investment world on his shoulders?  Scary thought. "

He has been for 3 years.  Few have the balls to be short going into a possible QE3 announcement.

Tue, 08/23/2011 - 09:02 | 1589712 jonny47264
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There will be no QE3 annoucement anytime soon.  Its too politicaly sensitive with Perry and Paul crritisising Bernank.  Also Gold prices are too high and the market is too skeptical of the fed.

 

QE3 would only be annouced if it was going to appear to work in the very short run.

Tue, 08/23/2011 - 09:10 | 1589745 SheepDog-One
SheepDog-One's picture

And Obamas big job stimulus program will consist of 'Go get a job, I did, and eat your peas'.

Tue, 08/23/2011 - 09:23 | 1589801 IMA5U
IMA5U's picture

it will actually be "eat your peas wall street"

 

it is time for the infrastructure bank to rebuild our "crumbling" bridges, roads and tunnels

Tue, 08/23/2011 - 09:24 | 1589812 dbach
dbach's picture

That beats some rediculous stimulus plan digging ditches

Tue, 08/23/2011 - 09:39 | 1589894 CH1
CH1's picture

Yeah... except for the fact that it's all stolen money.

Tue, 08/23/2011 - 10:05 | 1590039 oogs66
oogs66's picture

lol

 

Tue, 08/23/2011 - 08:56 | 1589693 EscapeKey
EscapeKey's picture

The Bernanke put is pretty much the only thing which matters anymore.

Tue, 08/23/2011 - 09:01 | 1589711 SheepDog-One
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Right, and wait till the Bernank announces 'No QE at this time' from JH in a few days! Big haircut time.

Tue, 08/23/2011 - 10:05 | 1590037 Shock and Aweful
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I don't think there will be much of an announcement either way....

I think he will be extremely vauge...and float a trial balloon....a suggestion of what they may consider doing...to see what the response is.

 

I think there are gonna be alot of dissapointed people / funds on Friday afternoon....as they watch the market lose all its gains for the week in about 2 hours going into the close.

 

It will be entertaining to say the least.

Tue, 08/23/2011 - 09:12 | 1589696 Earl of Chiswick
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Bloomberg (EU)  Interview from earlier this morning with

Dr. Strangelove?

http://www.bloomberg.com/video/74294002/

 

Roger Myerson, a Nobel laureate and a professor at the University of Chicago, U.S. Needs 8% to 9% Inflation   and if the Libyan rebels ask me for help I'll be there in an instant

Tue, 08/23/2011 - 08:57 | 1589699 Archimedes
Archimedes's picture

Scary indeed beecause he ain't coming with QE3 on Friday. He will yap about shifting his balance sheet around but that would mean he would have to sell some treasuries or MBS to buy others. Who is going to be the buyer?

I am so tired about hearing how the Fed has so many tools. All they can do is Lower interest rates and print money. They have done that and failed miserably.

Well, actually there are a lot of tools at the Fed, 7 of them!

Tue, 08/23/2011 - 09:04 | 1589719 SheepDog-One
SheepDog-One's picture

I think they mean the FED is ran by tools. Anyway, obviously thee will be no diamond encrusted QE3 gift delivered to Wall St, as has been baked into markets every day since January....big haircut coming real soon for the sheeple...401K and pension brigades are about to be decimated, while they suspect nothing.

Tue, 08/23/2011 - 08:59 | 1589708 Donlast
Donlast's picture

Equities are an asset, at least some of them, but bank and sovereign bonds are a disaster area.

Tue, 08/23/2011 - 09:01 | 1589715 ZippyDooDah
ZippyDooDah's picture

1) Bernanke

2) HFT

The whole story.

Let it fall!

Tue, 08/23/2011 - 09:08 | 1589739 SheepDog-One
SheepDog-One's picture

Yes and weird how Bernank picks right now, week of JH, to make markets appear all is well? No way these people are going to get their expected $2.5 trillion free gift to pump up stocks. Watch the fireworks next week as Bernank says 'ZIRP for extended period, plus we'll shuffle a bit of paperwork here and there...have a good day'.

QE3 priced in since Januarys DOW >10K. 

Tue, 08/23/2011 - 09:37 | 1589885 Esso
Esso's picture

I'm not so sure. The Bernank must know that 99.5% of the drooling retards that call themselves Duhmerikkans perceive the DJIA (or the more sheeplelike "stock market") as an indicator of the state of the economy. I think he will print as much money as necessary to defend equities prices, whether he announces QE3 or not. 

Tue, 08/23/2011 - 09:32 | 1589860 CH1
CH1's picture

+1

Let it fall!

 

Tue, 08/23/2011 - 09:04 | 1589722 Manipulism
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Rothschild überwacht SocGen

Innerhalb weniger Minuten bricht der Kurs der Société Générale drastisch ein. Grund sind Spekulationen über eine Pleite der Bank. So geschehen am 10. August. Nun steuert das französische Finanzinstitut gegen - mit Hilfe der Privatbank Rothschild.

Die französische Großbank Société Générale lässt ihren Börsenkurs künftig von der Privatbank Rothschild überwachen. Die beiden Banken schlossen einen 170 Mio. Euro schweren Vertrag ab, der zu starke Schwankungen des Kurses verhindern soll, wie Société Générale mitteilte. Mit dem Geld kann Rothschild Aktien der Großbank kaufen, etwa um fallende Kurse aufzufangen. Nach Angaben der französischen Börsenaufsicht AMF nutzen 19 der 40 im Pariser Leitindex CAC-40 notierten Firmen solche Dienste.

Tue, 08/23/2011 - 09:15 | 1589759 magpie
magpie's picture

L'equipe baronial contre-plonge ?

Tue, 08/23/2011 - 09:41 | 1589905 CH1
CH1's picture

Cross-post from ZeroHedge.DE ??

Tue, 08/23/2011 - 09:06 | 1589723 hugovanderbubble
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Estimated ZH readers,

Please look

The last update on CDS2yr in EUropean banks and US banks...

European

http://www.rankia.com/respuestas/906278/fotos/52316

US

http://www.rankia.com/respuestas/906278/fotos/52317

 

 

Tue, 08/23/2011 - 09:43 | 1589921 hugovanderbubble
hugovanderbubble's picture

I like to be the most negative post...just cos im posting REAL FACTS...

Maybe some one is losing money...dont get nervous...Banking system will explode

Tue, 08/23/2011 - 09:05 | 1589725 ArkansasAngie
ArkansasAngie's picture

Personally I've had with these criminals in Washington and on Wall Street.

 

Tue, 08/23/2011 - 09:34 | 1589871 CH1
CH1's picture

Quite agreed.

Time to ditch them and build alternatives. We can do better.

Tue, 08/23/2011 - 09:42 | 1589915 Esso
Esso's picture

Good luck with that. Hell, the hangings should be being televised 24/7, but there's not even been any arrests. I'm guessing there won't be, either. This country is now corrupt to the core.

Tue, 08/23/2011 - 10:03 | 1590029 Mongrel
Mongrel's picture

Yes, we can do better. See www.dixienet.org

Tue, 08/23/2011 - 09:06 | 1589730 disabledvet
disabledvet's picture

"it was quiet. Too quiet. I reached for my hosel. The smell of flatulence was in the air. Suddenly...

Tue, 08/23/2011 - 09:07 | 1589735 IMA5U
IMA5U's picture

but peter, the media keeps on telling us the fed is going to do something and barron's says its TIME TO BUY

 

and why is asia and europe higher everyday?

 

kommunist market forces must be in the works....

Tue, 08/23/2011 - 09:12 | 1589749 Racer
Racer's picture

And the dax still where it is after those appalling numbers earlier this morning

Tue, 08/23/2011 - 09:16 | 1589760 Earl of Chiswick
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from @Nouriel

 

Sheep or lemmings?   Shocked that people can't see lack of fundamentals in #Gold trading & act like sheep

 

http://twitter.com/#!/Nouriel/statuses/105989212729393152

Tue, 08/23/2011 - 09:18 | 1589772 SheepDog-One
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Roubini sold out SO hard....LOL I hope at least the paycheck was nice.

Tue, 08/23/2011 - 09:42 | 1589919 CH1
CH1's picture

"You want face time in front of the big cameras, you do us a few favors."

Tue, 08/23/2011 - 09:25 | 1589817 EscapeKey
EscapeKey's picture

What, like 1 or 2% of the population own gold in any significant measure. And yet, we're the sheep?

Fucking baaaaaaa.

Tue, 08/23/2011 - 09:17 | 1589766 kito
kito's picture

shirley its the credit market that is clearly confused.....

Tue, 08/23/2011 - 09:35 | 1589876 CH1
CH1's picture

Yes, of course...

and stop calling me Shirley!   :)

Tue, 08/23/2011 - 09:17 | 1589767 ZeroPower
ZeroPower's picture

Opening print in Xover was 690 today... for something that was literally in the 400s a few weeks ago, the b/a is abyssmal, the size of clips isnt there, and anyone wanting to lift and offer immediately moves the market by another few bp. Insane.

Tue, 08/23/2011 - 09:19 | 1589777 ben_bernanke
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"WHY ARE THE MARKETS GOING UP? WHY IS GOLD HEADING DOWN? THESE THINGS SHOULD NEVER HAPPEN"

~Apopletic Zero Hedge writer

Tue, 08/23/2011 - 09:25 | 1589789 SheepDog-One
SheepDog-One's picture

Ben...you tell me! Why are you pumping markets so much before JH Hmmmmmmm???

Settin up the Grand PumpnDump there huh? Yea youre not half as slick as you think you are at all.

Tue, 08/23/2011 - 09:23 | 1589798 EscapeKey
EscapeKey's picture

"House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals."

Ben Bernanke, October 20, 2005

Tue, 08/23/2011 - 10:02 | 1590019 Nothing To See Here
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"The global economy continues to be strong, supported by solid economic growth abroad. U.S. exports should expand further in coming quarters. Overall, the U.S. economy seems likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy's underlying trend. "

- The BenBernank, July 2007

Tue, 08/23/2011 - 10:30 | 1590169 TruthInSunshine
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"Many of you expected me to bring some fireworks, and dazzle you with something truly shocking."

{Bernank, wearing a cape and magician's costume, pulls a white rabbit from his top hat}

"Now, I don't disappoint. Watch me make this bunny disappear before your eyes!"

"Presto-Magico!!!"

{Bernank proceeds to rip the fur off the rabbit in front of a shocked audience}

 

--The Bernank, August 26, 2011; Jackson Hole, Wyoming

Tue, 08/23/2011 - 10:14 | 1590069 r101958
r101958's picture

As I posted elsewhere:

Let's just call this the pump, dump and prop game. Short term, in lieu of QE3, the big boys pump up (perhaps helping them on their way up) commodities (including PM's) and then sell at certain levels. They then prop up the market with those profits because they are fully invested in the markets with their almost free Fed funds. This serves two purposes; 1- it props up the stock market, for a while, without the normal Fed free money; 2- it suppresses the commodities market and, at least short term, keeps it within manageable ranges. PM's should continue to go up but these leaches will filch as much as possible on the way up.

Tue, 08/23/2011 - 09:20 | 1589784 SheepDog-One
SheepDog-One's picture

At this point, I hope they keep all-out market pumping going into JH, if they had any intention of 'Operation QE3' they'd have let markets slide a bit at least. Big haircuts coming for the calm grazers next week.

Tue, 08/23/2011 - 09:24 | 1589809 zorba THE GREEK
zorba THE GREEK's picture

Gold is going on sale now. It won't stay on sale for long. I have been all in for over

10 years and have followed it carefully. This may be last great entry point under $2500.

If you hold stocks, sell and go into gold now. If you believe the economy is going off a cliff

soon, as I do, then pull the trigger. Time is running out.

Tue, 08/23/2011 - 09:38 | 1589886 CH1
CH1's picture

This may be last great entry point under $2500.

Yeah, it may be.

Tue, 08/23/2011 - 09:38 | 1589888 Nothing To See Here
Nothing To See Here's picture

If Obama is going to win the future, QE3 will not be announced before next August. Meanwhile, we eat our peas and watch the Bernank's other moves.

Tue, 08/23/2011 - 09:43 | 1589925 youngman
youngman's picture

I bought some this am......we are all waiting for Bernanke...why?.....he does not have to say anything concrete.....but he can through a back door...do anything he wants....that is what he will do....and is probably doing right now...we need 5 trillion a year in newly printed money...not the headline deficit number of 1.6 trillion...its more than that....history will show I hope the truth...

Tue, 08/23/2011 - 10:13 | 1590061 Absinthe Minded
Absinthe Minded's picture

Margaret Brennan on BB just said," With all this bad news the Dow is up about 1%, I don't know how,but it is." The MSM are starting to slip and give clues that something is not right. Worse housing news yet and we're up 1% . Yeah, this is normal, no way the Fed is buying this market up.
sarc/off

Tue, 08/23/2011 - 10:24 | 1590131 tom
tom's picture

It's obvious this is Bernanke put buying. To be fair the Euro PMIs were slightly better than expected, China PMI as expected, but everything else has been worse or way worse. And that's when they buy, on the bad news. This isn't HFTs playing volatility, this is real money betting that the worse this week's data the better the chance of Bernanke "shock and awe".

Which sets the market up for a big disappointment if all they get on Friday is milquetoast.

 

Tue, 08/23/2011 - 10:58 | 1590288 juggalo1
juggalo1's picture

That's the real scary part.  If the panic abates on an expectation of intervention, Bernanke is more likely to disappoint.  Last week there were articles about panic, terror and shock.  This week it is about complacency, anger and the new normal.  If Bernanke is going by the data he might just continue with loose money.  Unless there is ongoing panic and market collapse he won't announce QE3 or the big interventions measures that the market wants.

Tue, 08/23/2011 - 13:44 | 1591021 RiskAverseAlertBlog
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Not concerned that, widening credit spreads are not immediately being reflected in the stock market. That present index levels are not likely to be seen again for years to come better explains what's going on today. No doubt, mechanisms for juicing bids in the stock market in the face of a terrible backdrop have been amply exercised for years now, and always is one left to conclude capital is being raised by leveraged weak hands on the backs of suckers, the likes of which find no shortage.

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