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The "Lehman" Moment

Tyler Durden's picture


Via Peter Tchir of TF Market Advisors

Lately it is hard to avoid talk about the Lehman "Moment".  It almost makes you think that the world fell apart the weekend Lehman filed for bankruptcy protection.  But that's not the case at all.  Stocks sold off that first day, bounced the second, had another sell off, but by the Thursday, they actually closed higher than the Friday before Lehman filed.  From there they generally went down. Often painfully swiftly, though the rallies were just as sharp. 

It wasn't until March of the following year that we hit the lows - a full 6 months after Lehman.

IG9 was trading at the time. 

It was not as wide as it had been right ahead of Bear Stearns weekend as we came into the Lehman weekend.  After an initial spike to new highs (the IG200 hats were finally worth something), IG9 rallied hard and got back to levels tighter than prior to Lehman's failure.

Although it has become popular to blame the entire sell-off on Lehman, it took a long time for the contagion to play out.  There were many fits and starts, and it is a little hard to believe that all of the bad economic data was directly a result of Lehman.  It was the catalyst, but it was an over-levered system that caused the markets to fail.  A more robust system wouldn't have failed.  For all of the talk about how Europe needs to TARP it's banks, it took a long time for that to have any lasting impact on stock prices.  It may have supported them, but the market continued to decline long after we had gotten TARP'd.

Greece clearly didn't default today, but there is growing sentiment that it should and it will.  Maybe it is October, maybe they kick the can further.  In any case, until the fundamentals are solved, we will continue to rally on belief that all is good, and sell-off on fears of contagion.  Just like we did after Lehman. It was a long battle after Lehman, and I think it will be the same when Greece defaults.  There will be days it seems contained and will look like Europe was successful in ring fencing its banks, and days it feels like its heading for contagion again and the problem will get out of control.


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Tue, 09/20/2011 - 15:55 | 1689903 GeneMarchbanks
GeneMarchbanks's picture

It's all coming together nicely...

The Grease fire is spreading like the plague.

Tue, 09/20/2011 - 15:58 | 1689928 He_Who Carried ...
He_Who Carried The Sun's picture

As  I type the TROIKA is on the phone again with Athens!

Why is there almost NO COVERAGE today?

Tue, 09/20/2011 - 16:02 | 1689949 nantucket
nantucket's picture

hey now!

Tue, 09/20/2011 - 16:15 | 1689990 redpill
redpill's picture

These belligerent markets! Just how many PapanTroika conference calls will it take before they are satisfied? We're talking on the phone, obviously everything is fine. Stop selling! Sellers should be arrested.

Tue, 09/20/2011 - 16:59 | 1690108 Spirit Of Truth
Spirit Of Truth's picture

The "market" waits until the opportune seasonal moment to break: Autumn Panic Update

Tis the nature of the beast. 

Tue, 09/20/2011 - 22:04 | 1690798 jeff montanye
jeff montanye's picture

in two, one ....

Tue, 09/20/2011 - 16:04 | 1689955 Arkaenun
Arkaenun's picture

They are all too busy staring at your avatar.

Tue, 09/20/2011 - 16:49 | 1690071 He_Who Carried ...
He_Who Carried The Sun's picture

That I CAN change...
Seriously, DPA (German Press Agency) gives updates, Le Monde reported, no Spanish, no English speaking paper does... weird!



According to the latest "good progress" has been made and the TROIKA will return to Athens next week.

Of course... Funny, I don't trust them...

Bloomberg just joined:

Tue, 09/20/2011 - 21:03 | 1690670 Stax Edwards
Stax Edwards's picture

Please cover them up some of us work in environments where this is frowned upon, if you don't mind.  You wouldn't want to see anyone lose their job over that fugly rack would u?  Put a cover over em

Tue, 09/20/2011 - 22:05 | 1690801 jeff montanye
jeff montanye's picture

fugly is as fugly does.

Tue, 09/20/2011 - 22:38 | 1690862 He_Who Carried ...
He_Who Carried The Sun's picture

Sorry, 'tis nature - gods creation and all human - my friend.

Either like it or find yourself another planet where lifeforms are born veiled

and females locked up.

Tue, 09/20/2011 - 23:09 | 1690917 snowball777
snowball777's picture

how about you find a less retarded place to work?

Tue, 09/20/2011 - 16:31 | 1690038 flacon
flacon's picture

That can't be. It's ciesta time in Greece!

Tue, 09/20/2011 - 15:53 | 1689911 lizzy36
lizzy36's picture

Amusingly i pointed this out to a friend last friday, when he said "the market expects greece to default and it is largely priced in and contained".

Controlled implosions rarely work.

In this case not even a possibility.

Tue, 09/20/2011 - 15:56 | 1689920 GeneMarchbanks
GeneMarchbanks's picture

'Controlled implosions rarely work.'

You had Geithner in mind, admit it.

Tue, 09/20/2011 - 16:08 | 1689965 maxmad
maxmad's picture

Actually building 7

Tue, 09/20/2011 - 20:26 | 1690595 Savyindallas
Savyindallas's picture

I'm still wondering  why we didn't capture and waterboard Bin Laden to find out who helped him with WTC7 for explosives. Of course, I shouldn't be so hard on the navy seals team  - pretty hard to get much useful info out of Bin laden, considering he died in late 2001/early 2002.    

Tue, 09/20/2011 - 23:11 | 1690924 snowball777
snowball777's picture

I'm sure they could get a hand up his ass and do some ventriloquism about yellow cake if it served their purposes.

Tue, 09/20/2011 - 16:02 | 1689946 malikai
malikai's picture

On the contrary. Controlled implosion has been perfected in the field of nuclear weapons. And it is quite fitting here, if I may add.

Tue, 09/20/2011 - 15:53 | 1689912 Robslob
Robslob's picture

Lehman bankruptcy...BULLISH!

Tue, 09/20/2011 - 15:53 | 1689913 wretch
wretch's picture

I doubt it'll be a whole 6 months again.  Bitchez.

Tue, 09/20/2011 - 15:56 | 1689917 Pretorian
Pretorian's picture

Watch out for BEN chopper mechnic and ECB professional idiots. They might pass a law requring DOW to hit 14 000.

Tue, 09/20/2011 - 16:17 | 1689997 TheSilverJournal
TheSilverJournal's picture

It's going to blow! Get to the choppa!!

Tue, 09/20/2011 - 15:55 | 1689918 rajc
rajc's picture

few of my favorite stocks borke today: aapl, CF, bidu, apkt and fcx. day when CAT breaks below 80-81 its decisively bear market.



Tue, 09/20/2011 - 16:03 | 1689952 Dr. Engali
Dr. Engali's picture

We have been in a bear market since 2000.

Tue, 09/20/2011 - 15:58 | 1689924 I am more equal...
I am more equal than others's picture

October...November...  while those who have clawed back some value in their 401Ks, etc, buy into the Animal House illusion 'all is fine, do not panic..' are clueless to the impending doom and despair that awaits them.  Wylie E. Coyote would be proud of the air time achieved in this vapor market.

Tue, 09/20/2011 - 16:20 | 1689926 hambone
hambone's picture

Strange ZH would post this now???  What relevance could this have to our present day market???

Is ZH trying to break BB's mojo ahead of his big day tomorrow???   Ben, if you're snooping ZH again, Keep your eye on the prize Ben, victory will be yours.  Shock the world and lets get this party started.

Plus - BB, if your listening, you may need to buy a shit load of copper cause otherwise one look at the good doctors chart seems to be implying a pre-Lehmanian economic collapse. 

Tue, 09/20/2011 - 15:58 | 1689929 Dr. Engali
Dr. Engali's picture

Greece isn't going to give us that "Lehman moment". It is going to be something out of left field that nobody is looking at. Well very few are looking at. My money is on China blowing up.

Tue, 09/20/2011 - 16:03 | 1689951 moldygoat
moldygoat's picture

Lindsey Williams did say "china was the big one". Could he be right?

Tue, 09/20/2011 - 23:14 | 1690936 snowball777
snowball777's picture

Who the fuck cares what a jackhole moron like Lindsey Williams says? You might as well take advice from homeless people and your pets.

Tue, 09/20/2011 - 16:12 | 1689976 Cliff Claven Cheers
Cliff Claven Cheers's picture

Yes, like a 300 lb chunk of of a broken up satellite falling back to earth and hitting say a nuclear power plant.  BTW according to nasa there will only be 8 chunks that make it all the way to earth and a 1 in 3200 chance it will hit a person, this thursday or friday.

Tue, 09/20/2011 - 16:16 | 1689991 Dr. Engali
Dr. Engali's picture

Yeah I read that too . They will just cover it up like the explosions in Japan and France. We never hear anything about them. What about the missile China launced off the coast of California?

Tue, 09/20/2011 - 16:23 | 1690014 TheSilverJournal
TheSilverJournal's picture

China won't blow up:

1. China makes stuff.

2. The RMB will rise once the Chinese stop throwing their purchasing power out the window by buying soon to be worthless US Treasuries, which will make the Chinese richer.

3. The Chinese need a large down payment in order to bower money in order to borrow real estate, so even if real estate prices drop 30%, hardly anyone will be underwater.

Tue, 09/20/2011 - 16:35 | 1690051 hambone
hambone's picture

Uhhh, wouldn't be so sure there sparky...if these folks had bought these as primary dwelling, might agree but that's just not the case...

60 to 80 million condo's purchased as "rentals" but are instead now vacant...these were bought as speculative flippers and now the market has them caught - plus the owners are far worse off cause it's mostly their money that's evaporating instead of the banks. 

As rentals, these places are fucked as the average Chinese citizen can't even dream of owning or renting at anything close to covering owners nut.

Of course China gets the majority of it's tax revenue from new construction so they must keep building to maintain revenue...not good for a market already completely saturated w/ RRE and CRE.

China is different than US but still big trouble...not sure how it will play out but lotsa pain to be had.

Tue, 09/20/2011 - 16:45 | 1690082 Panafrican Funk...
Panafrican Funktron Robot's picture

One needs only to look at how Chinese reverse mergers have performed to get a glimpse below the tip of the iceberg.

Tue, 09/20/2011 - 16:44 | 1690075 SMG
SMG's picture

1. What if no one wants your stuff or your foriegn customers  or own people can't afford it.

2.   Thus making your stuff too expensive, see #1.

3.   Haven't prices in some ares risen in hundreds or thousands of %, Partly pushed by a goverment spending spree of stimulis, that is now coming to an end.

China won't blow up:

Not saying your wrong, just something to consider.  Possibly change won't to might. 


Tue, 09/20/2011 - 16:31 | 1690037 oogs66
oogs66's picture

at some point if all their companies are frauds, isn't there a chance the whole country is a fraud?

Tue, 09/20/2011 - 17:31 | 1690178 zorba THE GREEK
zorba THE GREEK's picture

doc, I agree, it's almost always something few expected that is the black swan.

Tue, 09/20/2011 - 16:01 | 1689942 CapitalistRock
CapitalistRock's picture

Greece will be a drag long after they miss their first bond payment. The belief that those bonds will return 80% after X years will be debated and the banks simply won't have to write stuff down much. The only thing that changes after a sovereign default is the new terms on the debt. It certainly won't go away.

Tue, 09/20/2011 - 16:01 | 1689944 nantucket
nantucket's picture

i have far too little patience for things to play out,...since we have almot 99.9% certainty how it's gonna end, let's effin get there and move on.  this stupid delay game by TPTB may be the end of me i tell ya.  they're doing it just to eff me over.

Tue, 09/20/2011 - 17:05 | 1690125 Herman Strandsc...
Herman Strandschnecke's picture

It's times like these that you wish you were an immortal. (Ancient Greek god btw).

Lets get it over with and out the other side within our lifetimes please.

Tue, 09/20/2011 - 21:53 | 1690774 Vilnin
Vilnin's picture

I'm channeling Diogenes until this is all over

Tue, 09/20/2011 - 23:14 | 1690937 snowball777
snowball777's picture

Nice lamp!

Tue, 09/20/2011 - 16:08 | 1689960 falak pema
falak pema's picture

damnadation is the name of the coming age. Note it down in your agendas. Damnadation is the future. Lehman is the signature of its tipping moment. Now the continents are on the move and nothing can stop it. Hubris and Nemesis. Global Implosion.

The four horsemen rove the continents like free agents of inevitable destructive change, we are witnesses to its coming moment

Humanity has to find an antidote to damnadation. Its a formula that's only know to those who don't play the game, pure Gandalfian staff carriers who are harbingers of the other game, that of virtue. Outnumbered, they need their Tom Paine to light the flame of civic manifestation to reaffirm its undying claim. Back to Jeffersonian virtue.

Tue, 09/20/2011 - 16:09 | 1689967 sdmjake
sdmjake's picture

Speaking of those roaming Four Horsemen, looks like the 'dapple-grey' might be headed back to Japan...

Tue, 09/20/2011 - 16:15 | 1689988 Cliff Claven Cheers
Cliff Claven Cheers's picture

Good catch, I completely missed that Typhoon.

Tue, 09/20/2011 - 16:43 | 1690069 hambone
hambone's picture

Cat 3 or 4 making landfall near Tokyo - Krugmanian Bullishness for you Japan!!!

Tue, 09/20/2011 - 16:08 | 1689966 kito
kito's picture

cant wait till tomorrow when benbucks says nothing new. i wonder how much longer before the market realizes he is stringing them along with nothing to show for it? could it be tomorrow? NO SOUP FOR YOU!!!!

Tue, 09/20/2011 - 16:10 | 1689969 hambone
hambone's picture

Eventually he'll give them everything and eventually it will be worth nothing.

Tue, 09/20/2011 - 16:38 | 1690057 kito
kito's picture

very nice, but one has to question why he hasnt done it yet?

worries of inflation?

worries of political fallout?

worries that its acutally a waste of time?


could it be that ben of the past--ben who talked of money growing on trees--may not be the same ben of now?? is it possible?? we may find out tomorrow.....

Tue, 09/20/2011 - 16:52 | 1690088 hambone
hambone's picture

Ben's mission is to avoid the '30's depression...the fact that what we are now facing something that requires a different prescription seems unimportant.  Ben will ensure we win the '30's rematch but that seems to ensure we'll lose the 21st century war.

Really, I can't believe Ben would decide now, here, is the time for "half measures".  I think Rosie is right that Ben goes all the way to change the game or at least somehow extend the playing.  The half measure would dishearten the world and the confidence game of greater giveaways and extend / pretend could evaporate.  I think Bens going big...and the sooner the better cause the faster he plays his cards, the sooner the world understands he's full of shit.

Tue, 09/20/2011 - 17:27 | 1690174 kito
kito's picture

sorry hambone, but i threw some money at DOG (dow short etf) this morning. im fairly certain that there will be disappointment tomorrow.

Tue, 09/20/2011 - 17:38 | 1690193 hambone
hambone's picture

Should work but just make sure you have your pre-determined modest sell target and keep your hand on the sell'll likely get it but the mega reversals come so quick that if you are greedy, you are soon greedy and poor.

BTW - I'm not sure algo's know what "disappointment" is?  That is a human emotion and not likely much en vogue in equities these days.

Tue, 09/20/2011 - 16:12 | 1689975 Nothing To See Here
Nothing To See Here's picture

The markets are more broken now than they were in 2008 so I am not paying too much attention. I for one don't believe we have markets anymore. What we have are stock indexes which reflect the moves made by the insolvent institutionals. Everyone else is already out. Those zombie "markets" could as well levitate to 18,000 while unemployment reaches 70%.

Tue, 09/20/2011 - 16:22 | 1690010 MGA_1
MGA_1's picture

Hey... good point !

Tue, 09/20/2011 - 16:32 | 1690042 Belarus
Belarus's picture

Europe's a big deal, no doubt. But what about 1.5 trillion in unfunded deficit spending, ZIRP, and the possibility of massive of a debt crisis right here in the good ole US of A. I mean its not like we ourselves couldn't create the contagaion everyone is so sure Europe will catalyze......

Life is uncertain and it's no certainty it's Europe we should be heeding. Heck, perhaps Japan goes into hyperinflation tomorrow.....or US or something.

Like I said, or someone else said, when the weird gets going the weird turn pro.

Tue, 09/20/2011 - 16:40 | 1690063 aviat72
aviat72's picture

Greece is Bear Stearns.  Widely anticipated (sic) and small enough to be contained.

Lehman will be some one else; someone who was not supposed to be allowed to fail (as the word on the Street used to be).

Tue, 09/20/2011 - 16:45 | 1690077 LookingWithAmazement
LookingWithAmazement's picture

Finally, Armageddon! Or not?

Tue, 09/20/2011 - 16:46 | 1690083 Little John
Little John's picture

Sand pile analogy - the one about one grain of sand too many and all that.  Well the sand pile doesn’t explode: it - slowly at first - slides down to it’s angle of repose.  Thing about it is that once it gets started nothing will stop it. Seems gravity is like the “hidden hand” you can fool them with airplanes and fiat money for  a while with but what goes up (or is inflated) … well you know the rest. 

Tue, 09/20/2011 - 17:02 | 1690114 Two Towers AU AG
Two Towers AU AG's picture

Nah.. you are lying.. gravity only affects stocks.. "Netflix, Enron, Tyco " etc... my suspicion next in line is Priceline.. who will spend on vacation once europe starts to implode...  not the europeans for sure.. nor we Americans.. who will also be laid off en masse.... and the guys from south of the border.. when they want to visit USA.. they just dig tunnels.. they dont bother to Priceline it.

Tue, 09/20/2011 - 21:14 | 1690692 Stax Edwards
Stax Edwards's picture

Headed to the keys next week for some R&R.  Priceline works in major cities great, keys not so much.  Staying in MIA via priceline Sat night.  Avid Priceline consumer, but not momo chaser, I leave that to the psychologists.  AAPL on the otherhand now....

Tue, 09/20/2011 - 17:38 | 1690198 Srgato
Srgato's picture

This is a first-rate blog, Mr. Dyrden or whoever is really behind it.  It's truly primarly for fin. news.  For that reason, I am distressed to see grammatical errors in it.  "It's" can ONLY mean, "it is".  It is never the possessive form of "it".  The latter is "its", without the apostrophe. 

Tue, 09/20/2011 - 17:52 | 1690239 Little John
Little John's picture

Thank you grammar nazi

Tue, 09/20/2011 - 23:20 | 1690954 snowball777
snowball777's picture

It's Durden; now go back to remedial spelling until its lesson sinks in.


Tue, 09/20/2011 - 21:48 | 1690768 chistletoe
chistletoe's picture

I am still shielding my eyes in case of a "Carrington Event".


Such a thing now, with everyone's utter dependence on satellites and electronic communication these days,

would simply be beyond anything even in the movies ....

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serema's picture

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