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Oil And Bonds Slump As Stocks Get Draghi-Pump

Tyler Durden's picture




 

Draghi spaketh and the bulls taketh. Risk assets re-correlated in a hurry as Draghi stopped speaking and the US day-session opened (and buoyed by better than expected - though implicitly QE-off - data) risk was on like Donkey Kong. We ripped through recent swing highs, up to the year's highs, and then on to 4-year highs in the S&P and 12-year highs in the NASDAQ. But it wasn't all faeries and unicorns; after the European close, CONTEXT (our proxy for risk-assets) diverged notably lower as stocks extending their trend for the day; Oil dropped hard on rumors of an imminent SPR release and Gold and Silver trod water (after a busy night admittedly). The S&P 500 e-mini futures (ES) stayed in a very narrow range just above early August highs for the rest of the day as Treasury yields also started to stabilize at last Friday's levels with the 30Y up around 12-13bps on the week (notably more than the front-end). JPY weakness (carry-driven) as Draghi spoke, faded in the afternoon and along with the drift lower in TSY 2s10s30s there was a much less ebullient feel to everything - even as stocks decided to close at their highs of the day (as VIX fell back below 16% in the last few minutes down around 2 vols on the day). Volume was mediocre, average trade size above average, as the vinegar-strokes at the cash close saw bigger blocks come through.

 

Stocks diverged (bullishly) from risk assets after Europe closed as FX carry, Treasury 2s10s30s, and Oil were not buying into the hysteria - and gold and silver lumbered...

 

Treasuries and stocks kept pace for a while but soon equities were on their own...

 

Credit tracked stocks higher all day with IG18 back under 95bps and HY18 back above $99.50 - and a late day swoon in HYG recovered into the close... (quite a lot of divergence in the afternoon across asset-classes - though credit kept chugging tighter... we heard it was very thin in credit this afternoon so suspect the shorts got flushed early and this afternoon was reracks against ES)...

 

Commodities were a little noisy but in general were not as excited (as USD limped lower) but Oil's slump on the SPR rumors was rather notable...

 

Treasuries stabilized this afternoon - after selling off in risk-on mode as Draghi explained his dream...

 

Equity pain for the bears was evident but the capitulative thrust faded in other risk assets into the afternoon as perhaps the better data (no-QE) and conditionality of OMT (no-ECB printfest) started to sink in to bonds and FX more than stocks - though with financials and Materials outperforming (up 2.3 and 2.5%) who knows...

Perhaps this better sums up the day (h/t @Not_Jim_Cramer)

 

All eyes now on Obama during his speech this evening as we assume he will already have the NFP data for tomorrow...

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: Medium-term high frequency S&P 500 e-mini - today saw heavy volume blocks at highs with no follow-through...

 

Bonus Bonus Chart: YTD for US equity indices - Trannies unch, NASDAQ +24% - all you need to know...


 

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Thu, 09/06/2012 - 16:20 | 2769302 buzzsaw99
buzzsaw99's picture

they don't have big enough ballz to make stocks and bonds rise together anymore, not without more qe. just tiny testicles sloshing side to side in this slop bucket of a market.

Thu, 09/06/2012 - 16:23 | 2769311 falak pema
falak pema's picture

well at least the market is "normal", not pumped on total "steroid" effect. Tradeoffs are the sign of normal behaviour.

When you dikk goes up your pants drop. 

Thu, 09/06/2012 - 16:27 | 2769330 buzzsaw99
buzzsaw99's picture

He can't go down with three barrels...not with three barrels on he can't. [/Quint]

http://www.youtube.com/watch?v=CwdGYMM2bHM

Thu, 09/06/2012 - 20:25 | 2770005 Doublescythe
Doublescythe's picture

I took those Draghi gains today and bought some muthaf#ckin' ice and gold.

Inflate away bitchez, inflate away.

Thu, 09/06/2012 - 16:21 | 2769304 Xibalba
Xibalba's picture

Romney/Ryan just lost.

Thu, 09/06/2012 - 16:24 | 2769318 magpie
magpie's picture

On the contrary, the manipulative prepping betrays great uncertainty.

Thu, 09/06/2012 - 16:53 | 2769424 disabledvet
disabledvet's picture

Confidence game in every sense of the term.

Thu, 09/06/2012 - 16:49 | 2769409 Hype Alert
Hype Alert's picture

Happy Days are here again.  That's all you need to know.

Thu, 09/06/2012 - 17:26 | 2769551 earleflorida
earleflorida's picture

what says we don't get a 50k number tomorrow or lower?... and all the hopium gets prozac'd

great for algo's and the Trfloor, ya know

Thu, 09/06/2012 - 16:30 | 2769310 BlandJoe24
BlandJoe24's picture

Tyler's observations analysis can be insightful and sometimes brilliant, and underneath it all I sense a caring heart.

At the same time, in the last few weeks, reading posts and then seeing what the market actually does in the trading hours after his posts, i've been occasionally wondering if Tyler's been taken over by a wily, highly sophisticated, GS-designed bear-slaughtering algo-bot.

 

Thu, 09/06/2012 - 16:38 | 2769362 BlandJoe24
BlandJoe24's picture

....or...... perhaps the algo-bots read ZH (readership in the tens of thousands), and then run the market the opposite.   That way the "masters of wall street" get their sadistic pleasure punishing the bearish while earning a consistantly reliable profit off the several hundred ZH readers that trade on what they read...adds up to a sizeable portion of the human traders left...

 

Thu, 09/06/2012 - 16:44 | 2769381 magpie
magpie's picture

...the article bashing Rinehart might have marked the AUDs bottom

Thu, 09/06/2012 - 17:03 | 2769459 q99x2
q99x2's picture

ZH has almost always noted, "Buy the Fuckin Dip." And, Sometimes even inferred, "You Fucking Moron." So whats the problem?

Thu, 09/06/2012 - 17:53 | 2769620 BlandJoe24
BlandJoe24's picture

uh...funnier than you may realize, because I am indeed a.f.m.

b.t.a.i.m.,  TD's has been way more specific on "noted" and "inferred" re: trades.  and lately (last couple months) a lot of it's been wrong.... or right, if you're actually stealth gs sponsored bear slaughtering algo-bot.

 

 

Thu, 09/06/2012 - 16:54 | 2769429 slewie the pi-rat
slewie the pi-rat's picture

everybody has an agenda(tylerDurden)

somebody else noted here:  what about the volume?  i would add :> on the NYSE?  L0L!!!

c-dad hasn't been around much today...  or did i just miss him?

and on one of the doomer string ( of what?  10, yesterday?) while tyler or (?)  was leading a parade of clear tinklers into the future to another "ain't it awful" toon i actually commented

"here comes your 19th nervous short-queeze..."

and wolfR's bilary-bash yesterday indicated he was still drunk from the weekend, himself

situ = normal, BiCheZ!

bong-ho!

keep drinking, tyler!

Thu, 09/06/2012 - 16:57 | 2769432 mammoth mo
mammoth mo's picture

Here's the thing.

We wouldn't know either way.  At this point the truth is unbelievable.  Tyler is telling the truth but the smart money in the market gets killed everyday.  If you want to make money don't fight the FED in the short term but buy physical for the long term.

There is nothing Tyler can say that can conteract the united coordination of the Central Banks.  When it collapses he will have been right all along (he/she).

Until then we are all in wonder as the controlled market paints the exact picture it wants.  Logic and facts not withstanding.  The market goes up becasue some bad people want it to.

 

 

Thu, 09/06/2012 - 17:29 | 2769560 earleflorida
earleflorida's picture

perhaps  you should go to a more sympathetic site an leave our prophetic author to his own devices

what say you?

Thu, 09/06/2012 - 17:45 | 2769599 BlandJoe24
BlandJoe24's picture

signs of cultism:

- using words like "our" and "prophetic" together

- banishing anyone that "dares" to point, question, or even try and be funny about anything that anyone might take as an implied imperfection of... The LEADER... (you know, the one on the - physical - gold pedestal, aka O.P.A. )

Thu, 09/06/2012 - 18:49 | 2769744 Law97
Law97's picture

I have been keeping a rough tally of the trading suggestions and inferred trades suggested by the articles....such as "Market is set up for big disappointment on Draghi" which of course suggests a short.  The conclusion is that ZH has been wrong on daily and weekly moves, most often the big ones, about 75% of the time.  As we know in the trading world, anything that works 75% of the time is almost like having a crystal ball or golden goose.  Hell, most of us would be quite happy to have a system that works 51% of the time. So the "Reverse-ZH" strategy seems to be about the best trading strategy ever devised.  Maybe ZH should start charging for it's investment letter.  ...with the fineprint saying that to guarantee success investors should do the exact opposite of the recommendations in the letter...

Joking aside, this latest bull run of the last two months has been the most confounding I've ever seen.  By virtually any analysis, macro, micro, technical, fundamental, or otherwise, stocks should be down.  The only analysis that matters anymore is, of course, the various government manipulations.  It used to be, way way back in 2009-2011, that interventions were simply a major factor that traders had to keep one eye on.  Now government interventions have become the ONLY factor.  Literally.  In order to trade successfully, you need to be an expert in political science, not economics or business.  Whether the market goes up or down becomes an analysis of whether the ECB can bully Germany into an open-ended bond purchase or obtain monetization authority.  The market has become totally divorced from any other driving factor.  If you think you can predict what these various unelected officials are going to do (or announce) next, then you can do ok trading.  But of your skills are more akin to being able to predict future earnings of various companies, or macroeconomic trends such as unemployment or demand shifts, well, then that skill plus $5 will get you a couple quarts of malt liquor you can drink on your couch waiting for your next government check to arrive.

Mises crack-up boom, here we are.

Thu, 09/06/2012 - 19:09 | 2769793 BlandJoe24
BlandJoe24's picture

Thanks for the post,.  Were you joking about the 75% part? Becuase that seems about what i've noticed about the short-range tips, but unconscious loyalty to the logic and appeal of what i was reading prevented me from doing the opposite.  August 2012 turned out not to be 2010 and 2011 "all over again" at all...  The "KABOOM" twitter comment during Bernake's Jackson Hole speach (implying a big drop, and thus short, but in reality preceding a big pop) was my final wake-up call. 

This is not to imply any wrongdoing on Tyler's part , becuase i think he's sincerely trying to shine a light and be of service.  The bull run has indeed been mind splintering...even to sharp minds...

I will say that, as often as he points out how he was right - earlier - about this and that, it would be cool - and respect-building - to read him fess-up when he's wrong.

 

Thu, 09/06/2012 - 22:09 | 2769872 Law97
Law97's picture

Tyler is quite possibly the smartest dude around when it comes to seeing the big picture and seeing right through all the crap.  He is brilliant and is doing a great service to truth seekers everywhere....however, he should probably stay out of the trade recommendation business.  But that's not why I read him.  I read him for his laser-like clarity and bullshit cutting analysis of the larger trends.  Translating that keen and rare ability to successful trades is, shall we say, an imperfect science.

There is no way anybody can predict these markets using carefully researched logic and experience.  All that is out the window in this day of near totally manipulated markets. In fact, I think they manipulate the market on purpose to screw the smartest traders, especially those who have a strong bias towards old-fashioned free market principles. 

The people they are sucking the most money out of (via trading losses) are the people they don't like, the Tea Party kooks, the constitutionalists, the 2nd amendment, Barry Goldwater, gold standard, independent thinking, anti-globalist types.  The poeple that are making the most money in this environment are those who are putting all their blind faith in government.  This furthers the aims of the elites by rewarding their followers and punishing their skeptics.  All part of the master plan, a rather masterful master plan, if I do say so.

Thu, 09/06/2012 - 21:54 | 2770280 Turin Turambar
Turin Turambar's picture

While ZH contrarians may be right 75% of the time, I'll stick with GS contrarians - better returns with a longer performance history.

Thu, 09/06/2012 - 20:45 | 2770052 luna_man
luna_man's picture

 

 

"Blandjoe24", Ain't nobody stopping you from being part of the "hope and change"!...MY MAIN MAN, tells it like it is!...

between you and me, MY MAIN MAN,  IS ONE OF A KIND!!

Thu, 09/06/2012 - 16:28 | 2769313 Debtonation
Debtonation's picture

The Department of Energy is standing by to release our SPR if the president's reelection needs it.

Thu, 09/06/2012 - 18:40 | 2769725 LawsofPhysics
LawsofPhysics's picture

And I will buy the fucking dip.  Considering how much diesel we burnt this season, I may just take delivery too.

bloody sheep.

Thu, 09/06/2012 - 18:41 | 2769726 LawsofPhysics
LawsofPhysics's picture

Maybe they will release some of that expensive "green" fuel too.

Thu, 09/06/2012 - 16:25 | 2769319 otto skorzeny
otto skorzeny's picture

TVIX-WOW! where is a good place to find daily volume #s? what was volume today anyway? it's gettin that Sept of 2008 feel to it.

Thu, 09/06/2012 - 16:24 | 2769320 Roland99
Roland99's picture

Draghi-pump?

I think the ADP +200k private payroll report had more to do with today's melt-up.

 

Thu, 09/06/2012 - 16:27 | 2769329 adr
adr's picture

Or knowing the payroll report tomorrow will be terrible and that gives those in the know a higher point to sell. This type of ramp has happened before.

Of course the BLS has decided past statistics are meaningless and they will just create jobs at will. Maybe a 350k+ report tomorrow on 300k births.

Thu, 09/06/2012 - 16:40 | 2769373 Meesohaawnee
Meesohaawnee's picture

really so ADP is the truth now? weve really hit lows. Ramp on ADP yet Fed Ex warns already lowered and we fart. Wow what a fraud market

Thu, 09/06/2012 - 18:55 | 2769766 Law97
Law97's picture

Plus employment doesn't really have that much to do with corp earnings anymore.  You lose your job, who cares, you are no longer a potential consumer and so you drop off the earth as far as companies are concerned.  But FedEx, that has everything to do with corporate earnings.  That the market completely ignored UPS and now FedEx, and has been hanging on every word, hell even comma, from Bernanke and Draghi, says a lot.  Remember the good ol days when we would nervously await results from UPS and the other shippers and a big surprise would move the market 200-300 points?  Now, I bet most traders wouldn't even be able to tell you that FedEx just reported.  Their big miss and negative outlook hardly even made the news.

Thu, 09/06/2012 - 16:25 | 2769321 adr
adr's picture

Who knows is the right answer. Human trades are meaningless.

Muppets on the CNBC boards are all bragging how rich they are now from the ramp in stocks. That usually signals we are close to the real top, before the epic ride to the bottom of the hill.

When people post, "Hope you sold today because stocks aren't money."

and the muppet replies, "You're an idiot and I'm richer than you."

Well you know we are at the top.

Thu, 09/06/2012 - 16:30 | 2769340 HungrySeagull
HungrySeagull's picture

Well, sell and get out.

 

Once you sell and are in the money then tell everyone how rich you are.... ripe for plucking.

Thu, 09/06/2012 - 16:54 | 2769332 khakuda
khakuda's picture

Hahahaha!  SPR release!  Hahahaha.  Print money and counteract the effect on oil prices with a whopping release of 3 hours of demand!  Hahahaha!

Maybe, when they can print barrels of oil in their 3D printer they can play that game.

Thu, 09/06/2012 - 16:29 | 2769335 slaughterer
slaughterer's picture

OT: Momo love mi-cap ULTA in AH.  Women will not give uo their cheap cosmetics, even in recession.  

Thu, 09/06/2012 - 16:30 | 2769336 Hype Alert
Hype Alert's picture

If you give one kid a nickel and another kid a dime, which kid feels like he has more?

 

Neither, because if they both pooled their money, it's not worth carrying around.

 

Now, if you would have done that before we had central bankers, both of the kids would have been mugged on the way home.

Thu, 09/06/2012 - 16:32 | 2769345 caimen garou
caimen garou's picture

I was watching liz c on fox closing bell I think she wet her self from the excitement "dont you just love to make money!"

Thu, 09/06/2012 - 16:32 | 2769351 withere
withere's picture

I may regret asking this but what are "vinegar strokes"?

Fri, 09/07/2012 - 17:26 | 2773199 withere
withere's picture

Well, I come to this site for education and insight so everything is working out.

Thx

Thu, 09/06/2012 - 16:34 | 2769353 e-man
e-man's picture

The divergence between the 10 year and the SPX is increasing.  This will not end well for equities, unless the bond market has become the idiot in the school yard.

Thu, 09/06/2012 - 17:25 | 2769549 LawsofPhysics
LawsofPhysics's picture

What was the bid on the ten year anyway?

Thu, 09/06/2012 - 16:36 | 2769361 ArrestBobRubin
ArrestBobRubin's picture

What a joke Ponziworld is. Whore bitch Draghi burps and it's off to the races.

This is simply another manifestation of Stage 5 cancer of the fiat "system", nothing more. Totally unsustainable, yet it lures the suckers in.

If PM's dip tomorrow and next week on "news" of even more silliness, load the boat. It will be one of the last chances you'll get.

Thu, 09/06/2012 - 16:39 | 2769369 Milton Waddams
Milton Waddams's picture

Today is what happens when Wall Street front-runs an "anti-business, socialist" takeover of America.

Thu, 09/06/2012 - 16:58 | 2769443 dwdollar
dwdollar's picture

Front-run??? What's there to front-run? It's already happened. All that's left is some minor details.

Thu, 09/06/2012 - 16:44 | 2769385 dobermangang
dobermangang's picture

Gun sales are still very, very strong.  SWHC just reported blowout earnings and raised guidance.  Up 22% after hours. 

Got guns???

Thu, 09/06/2012 - 16:49 | 2769401 NaiLib
NaiLib's picture

Fact: Draghis DRAINS cash from banks. 209 Billion. That cash might be used to buy bonds IF Spain comply. First Spain has to APPLY for help. Then the Troika will set up demands, Spain will then go through the same circus as Greece, stall, negotiate, and renegotiate, etc etc. Its a looong process.

 

How the "markets" could treet this as an ECB QE is to me a big ?. So far its the opposite. And once they deploy the cash it will go into the spanish deficit.

 

I am amazed again, and still wonder WHO is the agressive buyer of European futures on a daily basis in the most aggressive manner I have seen in 30 years. Only once

I have seen it before and that was in 2008 when S&P blore 1000 , crashed to 800 somtheing and the in the afternoon suddenly was flushed with futures orders from everywhere...

Question is only, when will they stop. Once they do , this is over.

Thu, 09/06/2012 - 16:50 | 2769413 slackrabbit
slackrabbit's picture

So unlimited bond buying lasts only a day? Whats next, money printing with free Viagra?

Thu, 09/06/2012 - 16:59 | 2769444 Dogbark
Dogbark's picture

The dance floor is getting very rocky and music is more louder. Hold on to your pockets. Iether your ears will blow up or you'l fall on the floor face down, it is going to be bloody. Just stick your hand into the matrese's hole evry night (for good night sleep) to make sure your goden brick is still there.

Sat, 09/08/2012 - 14:00 | 2774861 MeelionDollerBogus
MeelionDollerBogus's picture

That's for people in nice countries. At this point if you're in a bad country you want that gold in your bung hole.
http://youtu.be/SSVMZUxiFBk

Thu, 09/06/2012 - 17:03 | 2769457 Meesohaawnee
Meesohaawnee's picture

I was listening to Chic all sports talk. Theres this dude named Dan Bernstein  (http://chicago.cbslocal.com/personality/dan-bernstein-3/)   whos a host. He can be complete dushbag but one thing you have respect for him is you learn critical thinking. You may not like him but you respect him.. He would NOT make it on CNBS. He exposed Lance Armstrong, Barry Bonds long before anyone suspected... Anyway hes speaking today of some ballplayers ( i dont name them) who just seem to do the unthinkable. The humanly incomprehensible etc.. He said ,(paraphrase) "In life usually if something appears,  way beyond human unthinkable achievement its usually a complete fraud" .......and im thinking. Wait im watching it today.........    Good job Bernsie.. I think you read this blog.. Its for critial thinkers like yourself.

Thu, 09/06/2012 - 17:04 | 2769467 beachdude
beachdude's picture

Does anyone know why Sprotts PHYS is down after hours?

Thu, 09/06/2012 - 17:20 | 2769530 pleseus
pleseus's picture

With no QE next week, the markets and gold and silver are set for a tumble

Thu, 09/06/2012 - 17:32 | 2769570 GernB
GernB's picture

First. No.

And Second. You haven't been around the market much have you. In stock market terms it is eons till election day, and we could move 10%+ between now and then easily. Not saying we will, but don't count your chickens. This kind of optimism seldom ends well.

Thu, 09/06/2012 - 18:01 | 2769644 ekm
ekm's picture

The other 16 voted for the following:
- Countries to self impose austerity
- Germany to pay for the bill after austerity is imposed.

So, Italy and Spain etc will have to accept more austerity. Not going to happen. Their only hope is that the german supreme court kills it so Germany can be blamed. It would be outright stupid for the german court to issue a clear verdict. I predict an unclear verdict with wide open interpretations.
This is just a hot potato PR war. Their bluff is that the german court will kill it.

Germany got the ECB members (not the countries yet) to sign for Austerity without signing for it. This is masterful. I cannot believe they fell in this trap, since Germany will have to buy their bonds regardless, in order to finance the purchasing of their over produced products.

I do not remember any more masterful game ever played in politics. Merkel + Weidmann managed to lure all the ECB board. I am at awe.
How can they be so stupid?

Thu, 09/06/2012 - 18:25 | 2769673 magpie
magpie's picture

This is infinite Euro QE with permanent stagflation as consequence. What Merkel or the Court have to say has no more bearing on any of it.

The only way the ponzi Euro will be unwound in deflation is via geopolitical pressure on a Grexit. Still likely, but very unlikely before the US election.

Thu, 09/06/2012 - 18:29 | 2769698 ekm
ekm's picture

This is QE on Austerity Conditions.

Countries will have to APPLY under austerity conditions in order to qualify. So, Spain would have to accept a lot more unemployment as a precondition. Huge, huge victory for Germany.

Its not going to happen. There is no way this can implemented. No freaking way, no way.

The politicians are bluffing that the german suprement court will kill it so they can blame Germany. Everybody knows there is no solution.

Thu, 09/06/2012 - 18:24 | 2769689 Tombstone
Tombstone's picture

It may look like heaven now, but more debt and QE will eventually come home to roost.  And I will bet that most of the party goers will wake up one day with a huge hangover. 

Thu, 09/06/2012 - 19:09 | 2769800 chump666
chump666's picture

Crazy.  Felt like after ECB kept rates unchanged the market was keen to sell as the whole ECB unlimited bond buy was leaked to the market days ago, stocks rallied anyway along with ADP figures.  A pure overpriced momo trade.

If the job report is a high No. QE3 will be pushed back, then maybe, maybe, we get our market correction (more so crash from highs).  That and hopefully the German court slams Mario down, otherwise the German people will.

The market is out of control.

Thu, 09/06/2012 - 19:12 | 2769807 chump666
chump666's picture

Asian session may not buy Mario's ulimited plan, plus USD bids will come in for the nth time (offset oil price/oil companies buying).

Everything is out of whack.

Thu, 09/06/2012 - 19:34 | 2769859 chump666
chump666's picture

hahahaha the bear pics!

So true...

Thu, 09/06/2012 - 20:03 | 2769948 Tsar Pointless
Tsar Pointless's picture

Well, I figured we would go toward 1500 before the wheels fell of of the tricycle, and Chairman Ben quashes all hopes of QEWhatever next week.

So, here we are, @ 1432. Is there room to move higher? There always room for more, just like Jell-O.

I don't think the NFP will have one iota of an effect tomorrow - well, other than to drive the markets higher if we get a blow-out number to the high side, as everything is all better now, so "BUY BUY BUY!" or, if the number is a shitter, to drive the markets higher, as hopes that Saint Ben will soon be here.

I've said it for a while now: Wait until after 9/11 to short the market. After that, short at will.

And put all of your casino winnings on white - i.e. Romney/Ryan - for 11/6. Which, BTW - if you're into such things - is 9/11 backwards and upside down.

Thu, 09/06/2012 - 23:33 | 2770497 erik
erik's picture

the bear images are hilarious!  before you freak out, i am bearish on the market.  i just think they are really funny.

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