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Mortgage Spreads Decompress But QE3 Divergences Start To Get Priced In

Tyler Durden's picture




 

As Bernanke was asked for the umpteenth time on LSAP and more specifically MBS purchases, the initial modest compression in mortgage spreads reversed and widened. However, TSYs and stocks diverged very notably as we suspect an initial kneejerk reaction to QE3 saw both being bought (and the USD weaken)...how long the half-life in this divergence?

Mortgage spreads did initially compress as Bernanke noted the possibility of additional MBS purchases should the situation warrant them. However, as equities rallied and TSY (rallied!!), the mortgage spreads deteriorated rapidly.

It did seem a little premature to be overly aggressively trading the QE3 divergence though

UPDATED CHART: more craziness

Charts: Bloomberg

 

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Wed, 11/02/2011 - 15:16 | 1838138 GeneMarchbanks
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'It did seem a little premature to be overly aggressively trading the QE3 divergence though'

How's that PrimeX doing?

Wed, 11/02/2011 - 15:17 | 1838145 Clueless Economist
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Green shoots...Recovery Autumn 2011

Wed, 11/02/2011 - 15:24 | 1838178 jdelano
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Is there really absolutely nothing happening in Europe today?

Wed, 11/02/2011 - 15:33 | 1838230 TruthInSunshine
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Buy stocks, especially the 50x p/e varieties that are really have eps losses without one time gimmicks.

Last one out of the equities Casino is a rotten egg, bitchez!

Wed, 11/02/2011 - 15:49 | 1838311 junkyardjack
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Once it gets the 50x p/e the only place left is 100x.  Deals like that don't come around a lot, hop aboard

Wed, 11/02/2011 - 16:10 | 1838402 srsly-wtf
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Merkel is sitting on GPap's face to shut him up....

Wed, 11/02/2011 - 15:17 | 1838144 Goldmanite
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Buy stocks. Doomers wrong once again.

Wed, 11/02/2011 - 15:18 | 1838152 camaro68ss
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haha your trolling wont work with a room full of people with brains.

This isnt a yahoo board

Wed, 11/02/2011 - 15:20 | 1838162 Goldmanite
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But....but...ZH and all bears were telling stocks were going down, they said an October crash was coming....

Wed, 11/02/2011 - 15:26 | 1838187 tmosley
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Who said that?  I never saw anyone around here saying any such thing.

Wed, 11/02/2011 - 15:26 | 1838193 d00daa
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oh fuck off and die already, bear market rally ftw where the fuck were you in august and september permaclown???

Wed, 11/02/2011 - 15:27 | 1838194 PicassoInActions
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Ask Jopamite's, they will bring the market down

Wed, 11/02/2011 - 15:29 | 1838199 LawsofPhysics
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Aside from some very useful spread information that I would not otherwise be looking for, what I see on ZH strongly suggests that equities will go up as the counterparty risk in ALL paper assets increases and the actually value of ALL paper goes to zero in the long run.  Timing is everything, play paper to get more paper to turn it all into physical assets that generate permenent revenue and improve your quality of life and chances of survival.  Do so before the banks runs and physical shortages start happening (as has been seen in the collapse of every single fiat system so far).  Good luck all.

Wed, 11/02/2011 - 16:36 | 1838532 SheepDog-One
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Hey Goldmanite dickhead in case you havent noticed your great 'bull market' has stocks trading at 15 year-ago levels. Gee, write home to mom about it why dont you.

Wed, 11/02/2011 - 15:25 | 1838181 unununium
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If you're trying to channel MillionDollarBonus, try harder.

Wed, 11/02/2011 - 15:39 | 1838259 greased up deaf guy
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do you and robo promise to come back and check in when gold goes higher than the dow (i.e., the REAL golden cross)?  promise? :-p

Wed, 11/02/2011 - 16:57 | 1838618 rumblefish
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"Buy stocks. Doomers wrong once again"

as long as the stock is SDOW, I agree.

 

Wed, 11/02/2011 - 15:18 | 1838147 TheLooza
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Is today the "just because" rally?  What the fuck?

Wed, 11/02/2011 - 15:20 | 1838159 GeneMarchbanks
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Yes. Stop questioning.

Wed, 11/02/2011 - 15:23 | 1838168 TheLooza
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I mean, can we get two red days in a row? Reality vs. weak busted rumor in a two day match up.  Reality should be able to manage 10-8 and 10-9 rounds.  Not a fucking draw.

Wed, 11/02/2011 - 15:28 | 1838200 GeneMarchbanks
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No such animal as 'reality' pal, only perception. You have an entire network seeing(pun intended) to it(perception) called CNBC.

You'll see plenty of red soon enough... only I'm afraid it'll be elsewhere.

Wed, 11/02/2011 - 15:31 | 1838221 TheLooza
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When the real red starts flowing, views on "no reality, only perception" begin to change too.

Wed, 11/02/2011 - 15:48 | 1838306 fuu
fuu's picture

We had Monday and Tuesday in the red. Today is the little dead kitten bounce.

Wed, 11/02/2011 - 16:36 | 1838535 SheepDog-One
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Pricing-in 'QE3' again you see...

Wed, 11/02/2011 - 15:18 | 1838150 qussl3
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Non stop coverage on QE3 incoming.

Gotta get the bagholders aboard.

 

Wed, 11/02/2011 - 15:20 | 1838153 DormRoom
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America, remember when growth was from innovation, and entrepreunship? Now, your financiers only fund growth from Central Bank debt.  The QE addiction needs to stop.

 Remember your great saint, Thomas Edison.

 

 

Wed, 11/02/2011 - 15:24 | 1838172 dexter_morgan
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Thankfully Tesla schooled him on AC power though, eh

Wed, 11/02/2011 - 15:24 | 1838173 GeneMarchbanks
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Tesla was the saint. Edison was a moneywhore. Poor example kid.

Wed, 11/02/2011 - 15:30 | 1838195 dwdollar
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In fairness, they both contributed an enormous amount. Edison was a better businessman/entrepreneur and Tesla was a better engineer. They would have made a fantastic team if they could have set aside their egos.

Wed, 11/02/2011 - 15:31 | 1838220 GeneMarchbanks
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Fair enough but only one of them was a ponce, it should be noted.

Wed, 11/02/2011 - 16:00 | 1838362 jdelano
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"better businssman"--if you mean because Edison was willing to utterly abandon any sense of morality or fairplay by launching a sustained and totally spurrious smear campaign by claiming that tesla's alternating current was instable and deadly while edison's dc was safe and benign, well (which by the way failed, as Tesla's AC was a markedly superior technology) I guess you're right? 

Fucking America.  Lie, cheat, steal, extort, and appropriate the talents of others and they'll call you a " business icon"  (Rockefeller, Gates, Jobs).  Use your brains to innovate and your hands to build something from the ground up and they'll call you.....nothing.  They won't even remember your name.   

Wed, 11/02/2011 - 15:28 | 1838196 tmosley
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Moneywhores get it done in a free market, baby.  Saints die poor, and leave only rumors and legends behind them.

Wed, 11/02/2011 - 15:26 | 1838189 Manthong
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I wonder when folks are going to figure out that debt as an asset is a bad idea if the debt can't be paid.

Wed, 11/02/2011 - 15:31 | 1838223 LawsofPhysics
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The "recovery" depends on no one figuring this out in mass.

Wed, 11/02/2011 - 15:23 | 1838166 espirit
espirit's picture

Also worthy of mention is vapor volume. 

How long is that going to last, ask ye?

Wed, 11/02/2011 - 15:28 | 1838208 junkyardjack
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It'll come in tomorrow just like last time, crap-tastic

Wed, 11/02/2011 - 15:23 | 1838171 Goldmanite
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And the DOW keeps ramping up. My god bears are so f.....

Wed, 11/02/2011 - 15:28 | 1838201 Irish66
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I'm rather enjoying your need to proclaim yourself.  Need a hug from somebody

and some attention. Poor baby

Wed, 11/02/2011 - 15:30 | 1838215 d00daa
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wtf are you talking about still trading below mid oct and the 200ma, i hope you don't trade the way you troll lmfao assclown.

Wed, 11/02/2011 - 15:44 | 1838283 greased up deaf guy
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hehe... markets haven't even retraced yesterday's losses, but the bulls are claiming victory.  queue bob pisani...

Wed, 11/02/2011 - 19:00 | 1839073 blunderdog
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Seriously, this shouldn't surprise anyone.  This is a living example of what happens when the fund manager has Alzheimer's.

Every day is a brand new universe, because you weren't really "here" yesterday.  No unpleasant memories!

Wed, 11/02/2011 - 16:38 | 1838546 SheepDog-One
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Goldmanite probably owns 3 shares of NFLX, and indexes at 1999 levels are good enough for him to call 'bull market' I guess.

Wed, 11/02/2011 - 15:36 | 1838174 Yen Cross
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 I would LOVE to see Santelli cut loose on Liesman on  ( KUDLOW)!

 

  That right shoulder on the (risk) chart is just about finished! This is just Hedgies/ sovereigns chasing the money! They missed the flows twice.  A { HAT TRICK }, is in the making!

 

   I got flat last night when a good poster reminded me of qe- , BS... I'm liking London!

Wed, 11/02/2011 - 15:25 | 1838180 bnbdnb
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I believe last time this divergence got so wide, EUR dropped dramatically overnight.

Wed, 11/02/2011 - 15:26 | 1838186 midgetrannyporn
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Tickle down bitchez.

Wed, 11/02/2011 - 15:28 | 1838202 GOSPLAN HERO
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Central planners know what is good for USSA.

Wed, 11/02/2011 - 15:28 | 1838204 Deadpool
Deadpool's picture

bullish, Bullish, BULLISH! markets don't lie. Santa Claus rally here we come.

Wed, 11/02/2011 - 15:29 | 1838209 Peter K
Peter K's picture

It's all about the USD. Ben trying to keep it on the mat, in the face of a stagnant US economy, a crashing EU economy, and inverting interest rate expectations/soon to be differential in the EUR/USD:)

Wed, 11/02/2011 - 16:39 | 1838551 SheepDog-One
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Yea really, lets see how long that lasts.

Wed, 11/02/2011 - 15:29 | 1838211 ssp2s
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Markets must rise during Ben's presser.  That's a top.

Wed, 11/02/2011 - 15:30 | 1838212 junkyardjack
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Better go all in on treasuries, markets about to get epic

Wed, 11/02/2011 - 15:30 | 1838213 gwar5
gwar5's picture

Time for a nationawide referendum on the FED.

 

Wed, 11/02/2011 - 15:30 | 1838217 Stack Trace
Stack Trace's picture

I read Bernanke's responses as setting the bar very high for QE3. He mentioned several times the concerns over undesirable side-effects of easing. oh well. Hopium belief in QE now is sad. I think we need to see a serious downturn in market before any QE will happen.

Wed, 11/02/2011 - 15:31 | 1838219 gwar5
gwar5's picture

Time for a nationwide referendum on the FED.

 

Wed, 11/02/2011 - 15:39 | 1838260 Yen Cross
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 Isn't  " Ron Paul" , campaigning on those issues?  I'm not taking sides.

Wed, 11/02/2011 - 15:42 | 1838267 NDXTrader
NDXTrader's picture

I don't think today has anything to do with the FED. I think no one wants to be short ahead of G-Pap having his CIA and MI6 dossiers being spread across a table in Cannes tonight. Seems simple to me: (1) The tell G-Pap that he can either play along and retire to a nice villa or suffer full personal warfare against his entire family, (2) If that doesn't work then he will be removed Friday due to money hitting the right Greek hands, (3) if he somehow survives that then the EU will pump enough money into the referendum YES! that it will make a US prez election look like a bake sale. This vote will never happen

Wed, 11/02/2011 - 15:53 | 1838330 TruthInSunshine
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G-Pap Smear's security detail has prepared a nice jacuzzi for him tonight.

Wed, 11/02/2011 - 16:05 | 1838381 jdelano
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Cat is out of the bag.  If G-Pap tries to backpedal now the Greeks will set Athens on fire. 

Wed, 11/02/2011 - 15:45 | 1838286 YesWeKahn
YesWeKahn's picture

So, the food prince and gas price are still due to japanese tsumani? Which tsumani? the one happened an year ago, or the 100 other tsumanis ever happened during the human history? Won't there be any tsumani anymore? How can Ben ensure that? if not, why this is transitory?

Wed, 11/02/2011 - 15:46 | 1838289 YesWeKahn
YesWeKahn's picture

Can someone check his sanity? He is beyand stupid.

Wed, 11/02/2011 - 15:47 | 1838300 peekcrackers
peekcrackers's picture

I am Just FED-UP.

with bullshit.

Wed, 11/02/2011 - 16:40 | 1838554 SheepDog-One
SheepDog-One's picture

AH yes....pricing in 'QE3' again for the elevtieth time I see....gotta raise stocks and make room for all that free money dontcha know!

Wed, 11/02/2011 - 17:05 | 1838649 Tense INDIAN
Tense INDIAN's picture

how long??.....till tomorrow

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