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Overnight Sentiment: European Vacation

Tyler Durden's picture




 

After declining to an overnight session low of 1.2260 following very disappointing Japanese GDP news, which saw another Q/Q drop in nominal terms and missed every economist expectation, the market leading indicator - the highly leveraged EURUSD pair which is a proxy for risk when it is rising, and ignored when dropping (because the ECB will lower rates, or so thinking goes) was boosted higher starting at 5 am eastern time. What happened then? Greek Q2 GDP was announced, and instead of declining from -6.5% to -7.0% annualized, the number declined at "only" a 6.2% annualized run rate. Apparently that was the only catalyst needed to launch today's risk on phase, sending the EURUSD 70 pips higher, and futures back to green. So to summarize: the world's 3rd largest economy grew far less than expected despite 30 years of central planning, while Europe's worst economy imploded by just that much less than the worst case expected, and this is "good enough." What's worse is that this may well be the high point of the day as there is nothing else left on the docket.

More from BofA

Asian equity markets ended the day mostly lower, on concerns over Chinese and other Asian countries' growth prospects. The largest declines were seen in Chinese markets, with the Shanghai composite falling -1.5%. In other major Asian indexes, the Kospi fell -0.72%, the Hang Seng was down -0.27% and the Nikkei was basically unchanged on the day (-0.07%) despite second quarter Japanese GDP growth of 1.4% that significantly under-performed estimates for a 2.3% expansion in Q2. The MSCI Emerging Markets Index dropped 0.3 percent after four weeks of gains.

In Europe, stocks are largely treading water after paring losses earlier in the trading session. Most major European markets are within a few tenths of a percent of unchanged.

In bondland, Treasuries are largely unchanged across the curve, with yields on the 10-year note dipping to 1.65%. 10-year bond yields in Spain and Italy are down slightly on the day, as investors rein in concerns about the prospects for fiscal consolidation and growth in each country. Conversely, German bunds yields have risen about 5 basis points on the day.

The dollar is trading marginally lower against a basket of major currencies, with the DXY index down about -0.2% as the euro strengthened for the first time in five days. Commodities are sharing in the risk-on environment despite weaker Asian growth; WTI is up 72 cents to $93.59 a barrel, while Brent crude is trading nearly $1.50 higher than Friday's close, at $114.50 a barrel. Gold is $2.60 higher, at $1622.80 per ounce.

 

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Mon, 08/13/2012 - 07:41 | 2700398 GetZeeGold
GetZeeGold's picture

 

 

Europe......the land of the never ending vacation.

 

Waiter....please give the check to Germany.

 

Mon, 08/13/2012 - 07:48 | 2700403 Gief Gold Plox
Gief Gold Plox's picture

I can't wait for mine (vacation, not check) Haven't been on one for so long. That being said,... you wouldn't happen to know what address ze Germans accept bills at?

Mon, 08/13/2012 - 08:03 | 2700423 zilverreiger
zilverreiger's picture

jealous? maybe its time to get your priorities straight

Mon, 08/13/2012 - 07:42 | 2700399 fonzannoon
fonzannoon's picture

I think it is starting to settle in around here that the "event" that everyone is waiting for is not going to happen. It's going to be a slow slide into the abyss. This will go on for a long time.

Mon, 08/13/2012 - 07:53 | 2700409 GetZeeGold
GetZeeGold's picture

 

 

It's like a cable snapping. The first snap kinda scares you. Then you get use to the sound.

 

Then....all of a sudden....you're free falling. Guessing when that's going to happen is the fun part.

 

Mon, 08/13/2012 - 08:06 | 2700426 HungrySeagull
HungrySeagull's picture

Vacation? What's that.

Oh, Sexual assault by the thugs at TSA.

A Day of Reckoning where your excesses are due.

The Nation will rediscover what a true vacation when jobs no longer exist and they wake up without some micromanaging little shit boss yelling into one ear.

I was finished work one day and my cell rang. I got truly angry because it is not my problem, not my time. From then on, I simply don't carry a cell. Employer wants to know it and I say they dont pay enough to justify one.

Tue, 08/14/2012 - 10:16 | 2703638 Offthebeach
Offthebeach's picture

Free falling is a lot like flying( until it isn't. ) . Anyway, every Muppet like anything to do with "free", so they have that going for them, which is nice.

I picture a rainbow rainfall of billions of Fuzzy, colorful, soft muppets all floating, laughing, bumping into each other, forming flying squares and other forms. So many billions of muppets that you don't see or sense the ground rushing up until the last moment. Above you billions of joyful voices. A reverse Rapture.

Mon, 08/13/2012 - 07:55 | 2700413 Headbanger
Headbanger's picture

The inmates are definitely running the asylum.

 

Mon, 08/13/2012 - 07:58 | 2700414 Dead Canary
Dead Canary's picture

I've never felt the "event" WILL happen. It COULD happen though. There are many...many black swans circling overhead like hungry vultures.

Slow death or quick, either way the end is nigh.

Mon, 08/13/2012 - 08:35 | 2700483 blueridgeviews
blueridgeviews's picture

Who needs a black swan event? Just the fact that their economies are contracting at a faster clip each month and all they can do is print money tells you they are not going to survive.

Am I missing something?

Mon, 08/13/2012 - 07:57 | 2700417 nmewn
nmewn's picture

Bobbing up & down in the waves, admiring all the sleek fins circling about, thinking things could be so much worse than they are...very bullish...lol.

Mon, 08/13/2012 - 07:57 | 2700418 cbaba
cbaba's picture

I Believe the Euro is pegged to Gold within a limited boundary by banksters in BIS. They are trying to stop flow of money into Gold from Europe. If they let euro drop, Gold in terms of Euro will rise substantially and everybody in Europe will scramble to get gold.

Mon, 08/13/2012 - 08:03 | 2700422 Inthemix96
Inthemix96's picture

Cheers ZH,

I thought this thread was going to give me a bit of an idea as to what a European vacation might be like.  But no, you have to go and spoil it with fucking facts about European problems.

I still would have liked to seen some smart birds on costa-del-sol beach with their titties out, while playing beach volley ball, with skimpy little light blue thongs half way up their backs, sun tanned mind.

And blond hair

:-)

Mon, 08/13/2012 - 08:04 | 2700425 fonzannoon
fonzannoon's picture

Peter Schiff is a pretty cool dude. He gives a shit.

http://www.youtube.com/watch?v=AvO907eV_Ic

Mon, 08/13/2012 - 08:08 | 2700430 XtraBullish
XtraBullish's picture

I am XtraBullish on ANYTHING non-cash, non-USD, non-Euro, non-Yen...the toilet tissue that comprises the full faith and credit of those currency regimes isn't worth discussing. The U.S. is the LARGEST DEBTOR NATION on the face of the planet and its leaders (banks) have zero respect for the currency so why should we?

Mon, 08/13/2012 - 08:11 | 2700438 Cdad
Cdad's picture

It is just embarrassing.  The extent to which the financial services status quo will attempt manufacture a positive catalysts based on a determination of "less than abominal" result somewhere.  We'll never function properly until this crowd of desperate bankers is simply swept from the building...all of them.  It is just embarrassing to watch these guys.  

But....or course...Romney....Ryan...we're almost saved!

 

Mon, 08/13/2012 - 08:12 | 2700440 Headbanger
Headbanger's picture

Such recent negative developments being ignored by the US equities markets

reminds me of the wood stacking game "Jenga" where players remove one

piece hoping the tower won't fall.

 

Which has me wondering what will that piece be which causes the collapse of

this teetering market when removed??

Mon, 08/13/2012 - 08:35 | 2700473 ebworthen
ebworthen's picture

Some bad news about the economy is actually good news because it may entice (force) the adroit (bumbling) FED to give public money (debt) to private banks (goblins) so they can invest (gamble) in bundled mortgage securities (clusterfuck of devalued assets) and save the economy (give themselves bonuses) and us (Soylent Green).

Mon, 08/13/2012 - 08:30 | 2700476 orangegeek
orangegeek's picture

Same old story - positive news spin on negative reality.  Pure and utter tripe.  Fooling every last possible buyer into the market before it drops.

 

And this is normal in a wave 2 within a bear market.

 

http://bullandbearmash.com/chart/standard-poors-500-daily-august-10-2012/

 

The next drop will be intense.

Mon, 08/13/2012 - 08:38 | 2700487 XtraBullish
XtraBullish's picture

The next drop will be intense.

Just like the one everyone predicted after the Fed and ECB decided on "No QE" resulting in a huge gap up into horrid news? Bull markets climb a wall of worry. Waiting for another 2008 is yesterday's trade. BTFD (in gold/silver).

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