Overnight Sentiment: Everyone At The Bailout Trough

Tyler Durden's picture

Futures are well bid overnight even though following a modest short covering squeeze of the new record number of EUR shorts, the primary driver of risk, the EURUSD is now back to mere pips above its 2010 lows. It is somewhat confusing why equities are so jubilant about what can only be more imminent bailouts, following statements by the ECB's Nowotny who made it clear that the ECB is not discussing the renewal of bond purchases and that the central bank provides "liquidity not solvency." Adding to the confusion was a release in Chinese daily Xinhua which said that China has no intention of introducing large scale stimulus. All this simply means that the only possible source of liquidity remains the Fed, whose June FOMC decision could make or break the global stock markets, pardon economy, and why this Friday's NFP print is so critical. Absent a huge miss, it will be difficult to see the Chairman pushing through with another $750 bn-$1 trillion in LSAP. Which Europe desperately needs: first we got Italy pricing €8.5 billion in 6 month bills at much worse conditions than April 26, with the yield rising over 2%, or 2.104% to be precise, compared to 1.772% previously, and a BTC of 1.61, declining from 1.71. More importantly, the Spanish economic deterioration gets even worse after Spain just recorded a record (pardon the pun) plunge in retail sales. From AP: 'A record drop in retail sales added to Spain's woes Tuesday as the country struggles to contain the crisis crippling its banking industry and investors remained wary of the country's ability to manage its debt. Retail sales dropped 9.8 percent in April in year-on-year on a seasonally-adjusted basis as the country battles against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline, and was more than double the 3.8 percent fall posted in March, the National Statistics Institute said Tuesday." So all those focusing on the Greek economic freefall may want to shift their attention west.

Finally, even as PIIGS bonds slide, the bulk of core European countries saw their bond yields drop to record lows as the pan-European capital flight continues.

More from BofA:

Market Action

Asian equity markets rallied on speculation that China would inject new stimulus into the economy to boost growth. That sent the Hang Seng up 1.4% and the Shanghai Composite 1.2% higher. The cyclically sensitive Korean Kospi managed to rise 1.4%. The Japanese Nikkei managed a respectable 0.7% gain while the Indian Sensex eked out a 0.1% rise. 

Earlier in the day, European equities were trading in positive territory until a Chinese news agency reported that China has no intentions of introducing a large stimulus program. Currently, in the aggregate European equities are down 0.1%. After the holiday weekend unofficially kicking off the Summer season, US investors are coming back to their desks upbeat pushing US futures on the S&P 500 up 0.5%. 

In bondland, Treasuries are bid across the curve. The US 10-year is trading at 1.73% down 0.2 bps while the long bond is trading at 2.83% down 0.1 bps. In Europe, German bunds contain to make new lows as investors seek their safe haven status. German bunds are currently trading at 1.35%. The bailout of Bankia and the downgrade of several Spanish banks over the weekend helped drive yields on Spain's 10-year yield up to 6.42%. 

The dollar is trading down 0.2% against a basket of other major currencies. Meanwhile commodities are higher. WTI crude oil is trading up 0.8% at $91.60 a barrel while gold is trading at $1,576 an ounce, up 0.2%. 

Overseas data wrap-up

Spanish retail sales spending collapsed in April falling 11.3% yoy. In the prior month, retail sales were down 3.8% yoy. In our view, the drop in retail sales is a result of the current deterioration in the economic outlook, the ongoing credit contraction and the fiscal contraction. 

The week's events

The data mills churn again this week, with the employment report and ISM on Friday and the second estimate to Q1 GDP on Thursday. We expect non-farm payrolls to increase 140,000 in May and the unemployment rate to increase to 8.2% from 8.1%. The ISM survey should show that the manufacturing sector continues to expand, but at a decelerating pace. We expect the ISM manufacturing index to tick down to 53.5 in May from 54.8 in April. We look for GDP to be revised down to 1.9% in Q2 from the advance estimate of 2.2%.

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cherry picker's picture

Christine Lagarde does not pay income taxes due to her status as a diplomat and she tells the Greeks they gotta pay.  The typical CEO, an employee, nothing more, makes $9.5 million a year while their workers in Mexico and China or even America make shit.  Without these workers, the typical CEO would be worth nothing.

Henry Ford found out the hard way, it is better to pay your people a decent wage for a decent days work, many became his customers.

The CEO of today is making a deadly enemy out of people who have to work hard, support families and still apply for food stamps while the asshole CEO is on CNN pontificating.

I am an old guy and I am getting angry.

Government workers are like CEOs now.

I don't begrude an enterpenuer his or her coin for taking personal risk to bring a new product to the market his or her millions, but these people are just making it on the backs of their slaves and the spirit of Spartacus is still out there.

macholatte's picture



In 2011, the best-paid Wall Street chief executive officer was Jamie Dimon at JPMorgan Chase & Co. (JPM) He got $23 million in total compensation. John Stumpf of Wells Fargo & Co. (WFC) got $17.9 million, while Lloyd Blankfein at Goldman Sachs Group Inc. (GS) had to settle for $16.2 million. Although Vikram Pandit at Citigroup Inc. (C) received $14.9 million, 55 percent of Citigroup’s shareholders voted for a nonbinding resolution that would have denied him that pay. James Gorman at Morgan Stanley (MS) took home $10.5 million, a pay cut of 25 percent from the previous year. Brian Moynihan at Bank of America Corp. got $8.1 million.

Where do they go? Well if the theorem is true that they follow the money, then there should be a stampede back into professions such as the media industry, where top executives quietly hauled down a fortune in 2011 compensation. For instance, Les Moonves, the CEO of CBS Corp. (CBS), was paid $69.9 million in 2011. David Zaslav of Discovery Communications Inc. (DISCA) received $52.4 million, while Philippe Dauman at Viacom Inc. (VIA) was paid $43 million. Walt Disney Co. (DIS)’s Robert Iger got $31 million. Jeff Bewkes, at Time Warner Inc. (TWX), was paid $26 million in 2011.

Even the top executives at Comcast Corp. (CMCSA), Brian Roberts and Steve Burke, received compensation of $27 million and $24 million, respectively, despite their pay being cut 13 percent and 32 percent, respectively, from the previous year. (It’s worth noting that Comcast patriarch Ralph Roberts, now 92 years old and still a regular in the executive offices at the company, once again took $1 in compensation for 2011.)

Wall Street Titans Outearned by Media Czars




GeezerGeek's picture

Now we know: the head honchos of the propaganda wing of the government get paid more than the head honchos of the financial wing of the government. Everyone listed is overpaid by a factor of 100. I doubt that Ralph Roberts would even notice the cut in pay.

toomanyfakeconservatives's picture

You feel that corporate, financial, and political CEOs are deadly enemies of the people? Me too. However, there is hope for the future. Listen to the middle hour of the "Drake interview" and see if you believe, as I do, that mass arrests of U.S. bankster-politicians is imminent...


HungrySeagull's picture

The classic case of the CEO's making millions while the workers make shit is a enduring one.

Get rid of the CEO, return control to a board or shareholders committee or even Unionize.

The CEOs will choke on their fiat while the golden parachute crushes them.

If the workers were allowed to make say... 20 dollars an hour flipping the burgers instead of shit minimum wage that no one can live on. That I lay at our Congress's feet.

Never mind the howls of having to price the burgers to pay the pimply faced crew minded by a handful of old fucks who cannot make a buck anywhere else.

Me? Ive had deer meat before. You gut, I cook yah?

Seize Mars's picture


"The classic case of the CEO's making millions while the workers make shit is a enduring one.

Get rid of the CEO, return control to a board or shareholders committee or even Unionize."

Spoken like a true central planner. Here's an idea: how about prices and wages are set by thousands of individual preferential free-will choices all made in concert. It's called a free market.

jekyll island's picture

Uhhh, Henry Ford manufactured stuff.  What does Lagard create besides inflation?  Who are her customers?  I share your anger, just not a good comparison.  

q99x2's picture

There you have it. banks, hedge funds with other peoples money and HFTs. Worse than watching an ant farm without ants.

Bobbyrib's picture

It's not my money. It's mostly not the retail investors money either. The wealthy and the Fed are the ones propping up the market now.

HungrySeagull's picture

Forget the Ant Farm when Fireants march on your house in your land building holes several feet deep that must be burned out with fuel.

Or Colonies of Rats sleeping under your stoop or basement wiring each night.

Josephine29's picture

There is a worse way of analysing today's fall in retail sales in Spain. Remember Greece? Well someone has!

What is the underlying index?


At this point you may be fearing the worst for this and you would be right to do so. The real level of retail sales has fallen to 75.7 where 2005 is 100...................


Just for comparison purposes where is Greece on this measure?


The latest volume retail sales numbers for Greece gave her an underlying index of 79.0. So on the latest numbers Spain is in a worse position than Greece!



Yes the Euro clowns have put Spain in as weak a position as Greece!


HomeBrewPrepper's picture

Just a dead cat bounce or is the fed already pumping for nobama. It's hard to play a manipulated market because everything is opposite the truth.

Move on nothing to see here til after November.

WmMcK's picture

It's hard to play a manipulated market ...

It's may be easier if you swing trade the metals.
For example, current GSR is > 55.5 --
Looking for a drop to ~ 53 and then another to ~ 48.
My "stop" (trading Au to Ag) is ~ 57.5.
Or, like you said, wait. What do I know?

blueskies123's picture

From 'thetrader' NewsThatMatters hot off the press:

The United States is well poised to withstand any fallout from Europe’s escalating debt crisis, a top Federal Reserve executive told the Wall Street Journal. Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said the United States should comfortably weather the debt crisis because its financial institutions have already cut their European exposure.

Moreover, he said on the Journal’s Monday online edition that “a flood of liquidity” into the United States, as investors seek safer assets, is more likely “than the drying up of liquidity.”


falak pema's picture

Everyone at the bailout trough ...

Here is ONE beyond redemption, a huge Banksta crony buncha of Lawyers hit the dirt :

Etats-Unis: le cabinet d'avocats Dewey Leboeuf annonce une faillite record - FRANCE 24


Dewey Leboeuf bites the dust; it was bigtime in Oligarch city of LOndon. Oh, the bail out trough, the going is getting rough even for the Oligarchy water carriers. 

Olympia's picture


The Eastern gates of Europe at risk: How Northern Europe shoots itself in the leg


A country in the outmost Southeastern part of the EU has grasped the headlines for quite some time. With only 2% of the EU's economy and just 2.5% of its debt it became the "Witch" that is haunted by puritan Northern Europeans. It is claimed as the epicenter of laziness, lust and unproductively for the whole of the Continent, a bad example that pious Northerns should be feared and loath at the same time. 

This country is Greece and it must be punished! But is it really the witch hunt that has started in 2009 the most stupid move ever made in the entire European history? Is it worth to blame Greeks for the lonely dark winters up in the North and for the depression syndrome that cripples the lives of dozens of millions northern Europeans, as if Greece makes the weather?


How Northern Europe shoot its leg, in order to satisfy the populist sentiments of an electorate being used to the fairy tales of "bad witches and pious farmers".


Panagiotis Traianou answers to many of the aforementioned questions and gives a proper solution on his article entitled “GREECE RANKS AMONG THE WITCHES OF SALEM”






blueskies123's picture

Amazing, where bad news is good news, up is down, down is up. Bank runs, bank takeovers means good news. Forget reality when you have money sloshing around thanks to TWIST and ongoing QE3, you have the power to pump up overnight futures and dump billions of dollars of buy orders at the market open since they'll sell later in the day to make money on those original buy orders that would have represented losses when originally placed.

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