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Overnight Sentiment: Calm Before The Storm... With A Surprise Twist

Tyler Durden's picture




 

If yesterday's global intervention rumor was a feeler of market response to the next latest and greatest intervention then we may have big problems: the EURUSD is now unchanged, Spanish bond yields are now unchanged, stocks are doing their quad witching thing which means all stops will be taken out before the day is done, but most importantly the euphoria such an announcement would have created before is now completely gone (as per The Diminishing Returns Of Central Planning). What is actually worse, and how the G-20 rumor may have backfired, is that as we pointed out, suddenly there has been a significant shift in expectations: if Syriza does not have an outright win on Sunday then there will be no immediate central bank response, which was predicted to be "if needed". Remember: for this market, when all that matters is the next 10 minutes of trading, this is the only relevant metric. Which means that suddenly from a Risk On event, Syriza's loss has become Risk Off! Of course, the reality is that Sunday will almost certainly be a replay of the last election, where the parliament continues to be empty, and Greece continues to be "Belgium" - recall from May 3, "Previewing The First Of Many Greek Elections." In either case, as others have suggested holding on to positions over the weekend may not be the most prudent thing.

Full summary of overnight sentiment from BofA:

Market action

Asian equity markets finished mostly higher; the one exception was the Korean Kospi which fell 0.7%. Investors' optimism increased as many now expect central banks to take action to help stimulate economic growth. That should help counter some of the softness in the global economic backdrop due to the recession & debt crisis in Europe and the looming slowdown due to the fiscal cliff in the US. The MSCI Asia Pacific Index advanced 0.8%. This week the index advanced the most in five months. 
Looking at the individual markets, the best performer was the Hang Seng up 2.3%. That was followed by the Indian Sensex up 1.6%. The Shanghai Composite managed to finish 0.5% higher while the Japanese Nikkei finished flat. 

In Europe, equities are climbing for the first time in three days due to the Bank of England announcement of credit easing measures. See overseas data wrap up for more info. In the aggregate, European equities are up 0.8%. Blue chips are outperforming up 1.6%. Surprisingly, shares listed in London are underperforming the broader market up only 0.6%. At home, futures are pointing to another risk in the S&P 500. The index is set to open 0.3% higher building on yesterday's 1.1% increase. 

The risk-on mood in the equity world has not trickled into bondland, Treasuries are actually bid suggesting bond investors are cautious about the global economic backdrop. In particular, they are likely worried about the upcoming Greek elections on Sunday. Late Sunday night we will likely know the outcome of the Greek elections. The 10-year Treasury is 3bp lower at 1.61%. In Europe, we continue to keep a close eye on yields on Spain's 10-year which are down 6bp to 6.79%. 
The dollar is weakening against a basket of other major currencies. The DXY index is 0.2% lower. Commodities are higher. WTI crude oil is trading at $84.48 a barrel while gold is selling for $1,625 an ounce. 

Overseas data wrap-up

The UK is preparing for the worst. Yesterday, the UK unveiled a series of measures that it will take to help insulate the British financial system and economy from the recession and ongoing sovereign debt crisis. As the UK's largest trading partner, the recession or worse (Grexit) in the Eurozone has the potential to drag the UK economy down with it. For more on the measures taken by the UK take a look at this piece by our UK economist. 

The BoJ left its monetary policy rate unchanged at today's monetary policy meeting. The BoJ also left the size of its asset purchase program (ie QE) unchanged. Like many other central banks it is monitoring the global economic backdrop very closely. In particular, it is very worried about the ongoing situation in Europe. 

 

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Fri, 06/15/2012 - 08:45 | 2528790 GMadScientist
Fri, 06/15/2012 - 08:47 | 2528796 Colombian Gringo
Colombian Gringo's picture

The surprise Twist that i am looking forward to are ropes around the necks of banksters.

Fri, 06/15/2012 - 08:49 | 2528805 GMadScientist
GMadScientist's picture

Was kinda hoping they'd live in fear and anticipation of the inevitable for awhile first.

Just enough to dissolve some stomach lining, wind up the muscles in their back, give em insomnia...you know: what they did to the rest of humanity.

Fri, 06/15/2012 - 09:07 | 2528860 mick_richfield
mick_richfield's picture

There is a lizard that has a long tail that is designed to be caught by its enemies.  If grabbed the tail pulls off easily, but the lizard survives.  Its enemy falls to eating the delicious prize while the lizard makes its escape, to feed in hidden places while its protection grows back.

The bankers whom we know are merely that tail.

If you want to strike the beast's heart, strike at the Powers' control of our money.  We must stop using money that power-loving people ( if they are indeed people ) can create at will.

Fri, 06/15/2012 - 09:15 | 2528894 Vince Clortho
Vince Clortho's picture

"... stop using money that power-loving people ( if they are indeed people ) can create at will."

A little gem from Mick that goes right to the root of the problem.

This is why there is a law in the US that FRNs must be accepted as the only legal currency.  IOW, you are a criminal ( or even a terrorist) if you refuse to use FRNs.  Quite insidious and thorough, are they not?

Fri, 06/15/2012 - 09:22 | 2528939 lakecity55
lakecity55's picture

Some states, like mine, passed legislation to allow Au and Ag legal for payments.

All 50 states need to do this.

Kidnap your state legislators until they comply!!

Fri, 06/15/2012 - 09:48 | 2529040 GMadScientist
GMadScientist's picture

The 'company scrip' routine has been a stand-by of theirs for generations.

 

Fri, 06/15/2012 - 09:15 | 2528896 flacon
flacon's picture

By 3pm today, the masses will have figured out that Syriza's loss has become Risk Off!, hence they will put RISK ON bets! 

 

By 3:59pm on Monday, nobody will take the markets seriously any more.

Fri, 06/15/2012 - 08:49 | 2528807 Short Memories
Short Memories's picture

STOP!

Popcorn time!

You can't touch this...

Fri, 06/15/2012 - 08:56 | 2528830 GMadScientist
GMadScientist's picture

True story and cautionary tale: I once sat behind MC Hammer on a SWA flight from OAK to LAX.

I could touch him. Man...he was tired of that before they got us our peanuts.

Fri, 06/15/2012 - 09:06 | 2528856 Floordawg
Floordawg's picture

I've worked with and know Hammer personally.

True story, there was enough gold plating in his Fremont Hills home to ride out the coming financial storm quite comfortably.

Can't touch that (now)... unfortunately.

Fri, 06/15/2012 - 09:51 | 2529049 GMadScientist
GMadScientist's picture

Honestly, I was impressed with the dude's frugality. I can't say I deeply appreciate what made him famous, but I respect his abilities as an entertainer even if he's not my cup.

 

Fri, 06/15/2012 - 10:14 | 2529170 Floordawg
Floordawg's picture

Despite all the flash that inherently covers ones fame, he is a good, down to earth, genuinely caring guy. He lived in the worst of Oakland, CA and never succumbed to the detrimental lifestyle that most do there.

I was never a fan of the music myself, which lead to some memorable and good life-learning skills on how NOT to be a bullshitter.

Fri, 06/15/2012 - 08:46 | 2528798 LULZBank
LULZBank's picture

In either case, as others have suggested holding on to positions over the weekend may not be the most prudent thing.

Not even emergency positions?

Fri, 06/15/2012 - 10:22 | 2529205 odatruf
odatruf's picture

I suggest that the position of holding on... to one's ankles... to be THE most prudent thing.  And maybe using a leather horse bit.

 

Fri, 06/15/2012 - 08:50 | 2528808 transaccountin
transaccountin's picture

wild wild west in the gold pits. they must be printing gold as we speak. love the fraud baby.

Fri, 06/15/2012 - 08:50 | 2528809 Boilermaker
Boilermaker's picture

SURPRISE!!!

Fri, 06/15/2012 - 08:53 | 2528816 valley chick
valley chick's picture

+1    You made my day. ;-)

Fri, 06/15/2012 - 09:01 | 2528837 GMadScientist
GMadScientist's picture

Male stripper jumps out of cake...at a bachelor party.

Fri, 06/15/2012 - 09:10 | 2528870 mick_richfield
mick_richfield's picture

In Sovietski Soyuz, male stripper strip you!

Fri, 06/15/2012 - 09:52 | 2529057 GMadScientist
GMadScientist's picture

It's hard out here for a dissident.

 

Fri, 06/15/2012 - 08:55 | 2528822 lolmao500
lolmao500's picture

The 10-year Treasury is 3bp lower at 1.61%.

That is funny. Bullish for deficits!

Fri, 06/15/2012 - 08:56 | 2528827 No Euros please...
No Euros please we're British's picture

Belgium isn't Greece.

Although maybe the EU could let Greece help out with the catering.

Fri, 06/15/2012 - 08:59 | 2528835 caimen garou
caimen garou's picture

houston....... we have a problem.......roger that....victor do you have a vector? ...no but we have paper,pecker!

Fri, 06/15/2012 - 09:03 | 2528844 GMadScientist
GMadScientist's picture

"Joey, do you like movies about Gladiators?"

Fri, 06/15/2012 - 09:01 | 2528839 adr
adr's picture

More easing will just make a bigger bang when the bubble blowers figure out nobody can stop the balloon from popping, so they just blow harder till it pops.

Fri, 06/15/2012 - 09:10 | 2528872 rsnoble
rsnoble's picture

I'm ready for the storm. Or at least a baby storm. I'm sick and tired of these assholes telling everyone everything is ok and a lot of people believing it. I made the mistake of telling friends what's going on in years past and pretty much have been put out to the pumpkin patch with Linus. A lot of people are coming around but the 2 biggest groups are still 1: I don't want to hear it or 2: you're full of shit.

Fri, 06/15/2012 - 09:18 | 2528916 lakecity55
lakecity55's picture

Try telling my old lady about it.

She does not want to set aside any $$ in cash to hold, or help with PM acquisition.

Needless to say, she is an Obamabot (schoolteacher).

When TSHTF, I'll be getting a lot of hot young pu**sy while she goes hungry.

Fri, 06/15/2012 - 09:19 | 2528925 spanish inquisition
spanish inquisition's picture

Alternate ending Thelma and Louise (FED$ and Euro) trying to escape the bond vigilantes - The closer they near the canyon of in/deflation they realize it is BIG and the only way to have a chance, is to jump it and land on the other size.  They started with project Jumpstart. They have upgraded to Project Supercharge for the 2.5 ton convertible which is now pulling an airstream full of the corporate military industrial complex cronies. If they can just make it to the edge of the canyon before something breaks and leap into the unknown... maybe start Project NO2 before they get to the edge... Just as they reach the edge and lift off full of hopes and dreams of success, the feeling of lightness and possibility...cut back to original film.

Fri, 06/15/2012 - 10:10 | 2529144 slewie the pi-rat
slewie the pi-rat's picture

when gBrit goes insular...

...the relative distance to the souce of the wind is decreasing for the fiat fecal fromage

these juggernaut pilots just do not ever turn, do they?

in related news children in brooklyn are refusing paper money from the toothFairy and their parents are looking to legislate anEmpire version of the utah legal tender laws...

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