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Market Snapshot: Market Anxiety Palpable

Tyler Durden's picture




 

While there was no news from the Greek-Troika discussions, 'deal' chatter was enough to juice S&P futures to day/night session highs (above 1200) on a significant rise in volume. All day we had 5-10pts swings in ES hinging on every headline from Europe and it was very clear that underlying equities themselves were being dragged in a very macro-manner (no surprise at the intraday correlation) with financials lagging most of the moves and ending down 2.7%.

The rally in stocks in the last hour was mirrored in EUR strength but not as much in credit markets (IG and HY spreads were far less excited). Notably front-end spreads underperformed - curves flattened in HY as single-names and indices did converge as we head into the roll tomorrow. IG still seems quite rich and HY modestly cheap to their respective fair-values - suggesting the market positioning is more biased to macro decompression and a flight-to-safety.

TSYs gave back some gains as ES rallied but were unable to get close to the same 'high' levels of the day ES managed. More critically, 2s10s30s, which had fallen all day, hardly budged as stocks rallied. ES average trade size picked up also as we reached 1200 suggesting (once again) that the professionals were selling into this strength.

So once again we see stocks acting on their own cognitive dissonance while general risk assets were far less impressed with the chatter. As the close approached, ES fell back from its greater-than-two-standard-deviation-above-VWAP level, converging back towards credit and TSY curve expectations.

It appeared a significantly algo-driven day (once again) in equity indices with VWAP playing a very significant role post European close.

Gold outperformed relative to the other PMs/commodities from Friday's close but still lost almost 2%. Copper -3.6% and Oil/Silver around -2.4% as the dollar gained 0.7% on the day. The EUR recovered half of its losses by the close ending at 1.368 (-0.8%) while JPY was the winner, strengthening 0.27% vs the USD on the day as carry trades were modestly unwound.

 

It seems to us that the Europeans are waiting on Bernanke by delaying this decision. Time is running out for the Greeks on their interest payments. We assume Bernanke knows he is being 'gamed' to some extent here and we also found it fascinating that Geithner chose to comment specifically that "U.S. in Good Position to Handle ‘Shocks’ From Europe" suggesting we should not panic if we see something scary from across the pond. Given the lack of movement in 2s10s30s, which remains our preferred measure of the market's expectation of a 'Twist' style solution from Bernanke, it would appear that the bond market is becoming less confident that it will occur. Perhaps this is a reflection of Bernanke calling the European's bluff with no global stick-save tomorrow? or perhaps it is simply business-as-usual and we will ease our way into oblivion.

 

Charts: Bloomberg

 

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Mon, 09/19/2011 - 16:54 | 1686124 Nascent_Variable
Nascent_Variable's picture

Just how bad is it out there?  UBS might actually have to cut bonuses.  It's been awhile since I've read the Bible, but I'm pretty sure that bankster bonus cutter is one of the Horsemen of the Apocalypse.

http://www.businessweek.com/news/2011-09-18/ubs-bonuses-at-risk-as-2-3-b...

Mon, 09/19/2011 - 17:21 | 1686222 IQ 145
IQ 145's picture

Market Anxiety Palpable / Market rallies. Normal Volume. (Can't bitch about the ghost volume anymore); get over it; it's called a rally. You'll survive being wrong again; no one will remember.

Mon, 09/19/2011 - 17:25 | 1686238 yabyum
yabyum's picture

Is that why I'am bleeding out of my rectum? There are no fundamentals, we are all screwed. Rally on!

Mon, 09/19/2011 - 17:26 | 1686241 d00daa
d00daa's picture

buy that fucking dip chief!

Mon, 09/19/2011 - 17:46 | 1686280 runlevel
runlevel's picture

i lol'd

Mon, 09/19/2011 - 16:54 | 1686125 SheepDog-One
SheepDog-One's picture

We're at the end of the road, no more wiggle room, we're damned if you do damned if you dont. Real shitty scenario here.

Mon, 09/19/2011 - 17:02 | 1686158 dwdollar
dwdollar's picture

When in doubt, print.

Mon, 09/19/2011 - 17:12 | 1686170 SheepDog-One
SheepDog-One's picture

Printing at this point brings only negatives, no more upside.  We'll see Wednesday when Bernank lip quivers and he mutters something about 'Monitoring the situation, real cool set of tools I have here, bond rate hand holding, blah blah', and then people will come to realize the salad days of free money are over for them and they got caught long with their hands out. When dropping in to a poker game, if you look around the table and cant see who the dupe is, its you.

Mon, 09/19/2011 - 17:15 | 1686199 dwdollar
dwdollar's picture

The 'upside' has always been an illusion. We all know that. But it didn't stop them before and it won't stop them now. It didn't stop them in August with ZIRP Forever.

Mon, 09/19/2011 - 17:22 | 1686226 wretch
wretch's picture

I've never died before.  I've always lived.  So I figure I'll live forever.

Idiot.

Mon, 09/19/2011 - 17:27 | 1686245 dwdollar
dwdollar's picture

So they'll let the banking system collapse just like they didn't in 2008?

Tue, 09/20/2011 - 01:17 | 1687684 FlyPaper
FlyPaper's picture

No: when in doubt, go out and make an idiotic speech to cut Medicare AGAIN and -by the way- raise taxes on everyone gambit.  (POTUS is so bad mothers are going to start teaching their children to holler and look for an adult if they see him coming).

 

Mon, 09/19/2011 - 17:18 | 1686216 IQ 145
IQ 145's picture

Market's rallying; S&P higher on Friday than last Friday; remember you heard it first here. Before you start screaming; I already bet money this way.

Mon, 09/19/2011 - 18:26 | 1686389 walküre
walküre's picture

You call this a rally?

 

Mon, 09/19/2011 - 16:55 | 1686127 Racer
Racer's picture

As long as they have apple juice to squeeze the 'market' higher nothing else really matters to the US 'market'

Mon, 09/19/2011 - 16:57 | 1686141 H H Henry P P P...
H H Henry P P P Paulson's picture

Since Greece has a deal with Troika now, does that mean chances of default dropped to slim-to-none in the short term? 

Mon, 09/19/2011 - 16:58 | 1686144 SheepDog-One
SheepDog-One's picture

Short term meaning next 5 minutes?

Mon, 09/19/2011 - 17:00 | 1686150 H H Henry P P P...
H H Henry P P P Paulson's picture

By the end of 2011.  Can Greece still default even if it receives a bailout?

Mon, 09/19/2011 - 17:01 | 1686157 SheepDog-One
SheepDog-One's picture

Well, since bailouts solve absolutely nothing, yea I'd say Greece is still bankrupt even if theyre handed some more free money from some fool to throw on the bonfire.

Mon, 09/19/2011 - 16:59 | 1686147 LeonardoFibonacci
LeonardoFibonacci's picture

NO DOOMSDAY TODAY!!! Maybe tomorrow or the day after, but please refrain from jumping off a tall building just yet as i have a feeling they will manage to fool the sheeples once again.

Mon, 09/19/2011 - 17:04 | 1686166 SheepDog-One
SheepDog-One's picture

I'd welcome Wall St employees to jump off very tall buildings anytime day or nite!

Mon, 09/19/2011 - 18:03 | 1686321 DeadFred
DeadFred's picture

They will be able to fool the sheeple tomorrow only if the sun comes up AND the day ends with the letter "Y", otherwise all bets are off.

Mon, 09/19/2011 - 17:00 | 1686153 Little John
Little John's picture

slow motion trainwreck

Mon, 09/19/2011 - 17:00 | 1686154 SheepDog-One
SheepDog-One's picture

OH yea sure Timmah, we're real strong here in the US to absorb shocks from across the pond in way less bankrupt Europe. 

Mon, 09/19/2011 - 17:02 | 1686160 Cleanclog
Cleanclog's picture

Sure has moved California's troubles off the front page.  So many people playing kick the can.  I've nearly forgotten how that childhood game ends.

Mon, 09/19/2011 - 17:09 | 1686185 Cheesy Bastard
Cheesy Bastard's picture

As I recall, the game usually ends when you secretly fill the can with cement.

Mon, 09/19/2011 - 17:10 | 1686190 SheepDog-One
SheepDog-One's picture

Or poo, then lite it on fire.

Mon, 09/19/2011 - 17:18 | 1686212 Cheesy Bastard
Cheesy Bastard's picture

No fan necessary that way.

Mon, 09/19/2011 - 17:24 | 1686234 Cleanclog
Cleanclog's picture

Actually did play that rendition on Francisco Court and La Cresta Way back in the day.  Only after we were already sick of Mother-May-I and Colored Easter Eggs and Red Light Green Light (before we graduated to Capture the Flag).  

This time . . . there's a lot more riding on the game.  "It" is gonna wreck a lot of havoc.  And not just in the neighborhood.

Mon, 09/19/2011 - 17:12 | 1686195 Spitzer
Spitzer's picture

Thats right

Cali is the biggest US state. Germany is the biggest EU state I think... The EU is miles ahead.

Greece hasn't even issued IOU`s yet.

Mon, 09/19/2011 - 20:31 | 1686826 Frankie Carbone
Frankie Carbone's picture

"Sure has moved California's troubles off the front page.  So many people playing kick the can.  I've nearly forgotten how that childhood game ends."

It always ends with the kid kicking the can once too far and running out after it into the street only to get "frontaled" by the 18-wheeler that he never saw coming. 

Mon, 09/19/2011 - 17:06 | 1686175 AbelCatalyst
AbelCatalyst's picture

Coordinated uber-stimulation Wednesday (after Greek "deal" tomorrow)...  At some point the Bernak is not going to get the market response he wants and the market will tank...  until then, up, up and away!!  

Mon, 09/19/2011 - 17:09 | 1686186 SheepDog-One
SheepDog-One's picture

The game is over. I cant wait till Wednesday when all the 'free trillions comin' crowd is trying to unscramble the FOMC word jumble for where the free trillions have been delivered, and finds out theyre not there.

Mon, 09/19/2011 - 17:18 | 1686217 buzzsaw99
buzzsaw99's picture

hope ur right

Mon, 09/19/2011 - 17:11 | 1686193 Gator8
Gator8's picture

Tyler, what is your short term and medium term target on Gold in USD???

Mon, 09/19/2011 - 17:15 | 1686203 IQ 145
IQ 145's picture

Tyler doesn;t know anything; he writes exciting headlines for a living. What;s the matter with you? If you believe anything anyone tells you on this subject there;s a fifty percent chance it will help to distort your opinion in such a way as to help you lose money. Wake up, please. No one had a crystal ball. No One.

Mon, 09/19/2011 - 17:12 | 1686196 mynhair
mynhair's picture

TD, or whoever, these posts are the best!  Love the new chart (white background).

 

Mon, 09/19/2011 - 17:29 | 1686249 Arkaenun
Arkaenun's picture

Just curious, but does the threat of Op Twist looming over the market make some of these comparisons a little suspect? I really am asking to learn something, not trying to be a smartass.

Mon, 09/19/2011 - 17:40 | 1686275 hampsterwheel
hampsterwheel's picture

My G*d! How much longer must this saga take to play out?!!! Watching a crisis and riot every day endlessly with each new crisis replacing the old crisis, and each rumor replacing last hours rumor is as painful as watching stuttering John read off David Letterman's top ten list of toungue twisters....  I'd rather watch all the commericails on Oprah's last season played in an endless loop .... I would rather see Brett Farve talking about coming back out of retirement...

I feel like I dropped a quarter into a porn booth only to watch the characters sitting on the couch talking to each other as my timer ticks down - and I have to insert another quarter.... and I'm all out of quarters - is anyone going to get laid - or is this the best ponzi scheme ever created and it never ends ? My G*d - I'm going to shut off the news until I see some actual dead bodies in Athens (aka) Syria or bankers falling from high buildings - until that - there is ZERO to see here .... unbelievable....

Mon, 09/19/2011 - 17:55 | 1686297 New_Meat
New_Meat's picture

"My G*d! How much longer must this saga take to play out?!!!"

Dude, back on that wheel.

- Ned {4 legs good}

Mon, 09/19/2011 - 18:15 | 1686351 DeadFred
DeadFred's picture

Remember that delivery truck that almost hit you yesterday, only you got out of the way just in time? Maybe it DID hit you and you died and went to "Waiting-for-the-Euro-to-die" hell. It would explain a lot.

Mon, 09/19/2011 - 18:32 | 1686412 lapedochild
lapedochild's picture

Futures started to take a hit around 6:20pm EST.. .what happened?

 

-7 on the spx, -60 on djia

 

http://www.sgxniftydowfutureslive.com/index_files/DOWFUTURES.htm

Mon, 09/19/2011 - 20:22 | 1686789 Frankie Carbone
Frankie Carbone's picture

A goddamn phone call? Seriously? A goddamn phone call was good for a 14 point ramp on the SPX?

Well, if its that easy.... 

Keep an eye out for NFLX tomorrow at 2pm. I think I'm going to call Reuters, AP, and the FT and tell them that the phone call between Netflix and Apple went spectacularly. 

After I drop a 100 grand on NFLX call options first. Hee hee hee. 

Mon, 09/19/2011 - 22:02 | 1686834 Frankie Carbone
Frankie Carbone's picture

What's up with IQ 145? WTF?

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