Overnight Sentiment: Overbought, Underconfident

Tyler Durden's picture

After rising in the overnight session following the overbought momentum chasing yesterday's hawkish tone by the Fed (don't ask), futures, European stocks, and sovereign spreads took a turn for the worse following the big miss in European confidence and sentiment, all of which posted material declines, and slid to two and a half year lows. And while the traditional upward stock levitation will resume once the European market close is in sight, only one thing can spoil the party and derail the most recent pseudo-hawkish statement out of the Fed: initial claims, which are expected to decline to 375-380,000 from 386,000 last week. Instead what will most likely happen is a print in the mid to upper 380,000s, while last week's number will be revised to a 390K+ print, allowing the media to once again declare that the number was an improvement week over week. In other words, SSDD.

Summary from BofA:

Market action

Overnight, Asian equity markets finished mixed but the MSCI Asia Pacific Index managed to increase 0.6% on the strength of the strong rally in the Hang Seng which climbed 0.8% easily offseting the modest weakness in the Shanghai composite (-0.1%) and the Indian Sensex (-0.1%). The Korean Kospi managed to finish 0.1% higher while the Japanese Nikkei finished mixed.

Earlier in the day in Europe, equity markets were trading higher but made a turn for the worse after an April report showed confidence remains weak in the Euro area and borrowing costs for Italy are on the rise. In the aggregate, European equities are down 0.3%. In the US, futures are pointing to a 0.1% sell off today after rallying 1.4% yesterday.

In bondland, Treasuries are bid as investors worry about the risks that the continued weakness in Europe poses to the global economic backdrop. Both the 10-year and 30-year Treasuries are 3bp lower to 1.95% and 3.12% respectively. In Europe, yields on the Italian 10-year are 4bp higher to 5.66% and the Spanish 10-year note is 8bp higher at 5.83%. Meanwhile, the UK gilt and German bund are both bid as investors rush to safe havens.

The dollar is weakening marginally in the currency markets with the DXY index down 0.1%. Commodities are mixed: WTI Crude oil is 19 cents cheaper at $103.93 a barrel and gold is $3.10 an ounce higher at $1,646.73.

Overseas data wrap-up

Korean's economy grew by 2.8% yoy in the first quarter of 2012, a bit lower than market expectations of a 3.0% yoy increase. The growth rate slowed modestly from the fourth quarter when the economy expanded by 3.3% yoy. Despite the weaker than expected GDP growth rate our Korean economist was encouraged by the strength of private consumption - which has been the main source of concern for Korea's 2012 growth prospects. We maintain our forecasts for 3.0% growth for the country in 2012 but the strength of the consumer puts upside risk to that forecast.

Today's events

The only thing on the economic calendar today is the initial jobless claims report released at 8:30 am. Initial jobless claims are expected to drop modestly to 380,000 for the week ending April 21 from 386,000 the week prior.

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Boilermaker's picture

SPX probably only gunned up another 10 handles instead of the full 20.

maxmad's picture

Spanish IBEX getting crushed again!

navy62802's picture

MIB ain't doin so well either.

LongSoupLine's picture

aaaannnnddd, it's gone.

Here comes the futures "up your ass" ramp job. 

power of the ponzi...f'ing unreal.

Bobbyrib's picture

You know the job numbers will be doctored to look good and the market will be in positive territory by the end of the day.

LongSoupLine's picture

yep, as well as "housing contracts".

Wakanda's picture

Stupid Shit Dumber Daily

Son of Loki's picture

"Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012."


Perhaps the retail investors have a better sense for what's happening then the Big Institutions esp since it is their own money as opposed to OPM.

Bobbyrib's picture

I think the retail investor is somewhat returning to the market. I wouldn't worry about the institutional investors, they'll find a way to unload their securities at a steep profit leaving the middle class holding the bag.

insanelysane's picture


CNBC is doing something called The Disruptors this morning.  Are we going to see ZH represented?

LongSoupLine's picture

How fitting, since CNBS are the "distractors".

i.e. - "Europe is crashing...Now lets go to Phil LeBeau for a report on a pretty red car!"

valley chick's picture

A local tv station posted that the "officials" say things are getting better in the job world and not one comment from the sheeple that agreed with them.  Some responses were actually angry regarding the lying of such stats.  So if the sheeple can see that they are being lied to then how long can this nonsense continue? 

tocointhephrase's picture

The truth is a disruption wow aint that the truth!

disabledvet's picture

with Apple leading the charge the US has shown yet again "it is totally dominant in the electronics industry." Just ask Sony. Next stop: Aerospace. "The capital expenditures are so huge only a few players can even exist." Boeing obviously stands out...but there is an industry (United Technologies, General Dynamics, Lockheed/Martin, etc...) who as with the electronics space "the growth has only just begun." Given the truly massive...indeed Continental space...the USA, Europe, the former Soviet Republics and Western China offer should/how governments utilize this "air space resource" will be a powerful thing indeed. As with Apple "short Boeing at your own risk."

Change-In-Trend's picture

GLD Update


  • I continue to work on the model to improve its efficacy as a market directional model. Admittedly, I am a self confessed workaholic and perfectionist. So any psychologist would likely have a field day with me lol.
  • The previous comment regarding Gold having formed a low has a high probability of being INCORRECT. 
  • I have attached a cycle progression chart of the SPDR Gold Trust ETF (GLD). 
  • This cycle is currently on day 33 of its current cycle and is therefore currently in a strong cycle.
  • I have included an additional statistical measure named "Probability of 10d Cor ". This is a measure of the percentage of all data points where the 10 day correlation score was positive. The higher this statistical measure the more likely price will follow the cycle progression forecast.



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RockyRacoon's picture

To apply TA to any of the PM machinations is an exercise in futility.  You might as well be working on astrological charts... with better success.

Dick Darlington's picture

But but but, how can this be true??? All i hear is that only perpetual bank bail outs, currency debasement, and exponentially growing debt is going to save us.

April 26 (Bloomberg) -- Iceland central bank Governor Mar Gudmundsson said the lasting damage to the island nation from its 2008 economic collapse will be “less than feared,” as unemployment is coming down and real incomes have started to increase. He spoke at a conference in Lisbon today.

Iceland! Iceland! Iceland!

nick howdy's picture

It will save the bank$ters...The American people..not so much..But then again who ever gave a shit about them..

Maybe JFK....But they fixed that "problem"

nick howdy's picture

People just don't know what to think or believe anymore...The false reality given to you by the MSM is an increasing Delta as compared to what you experience in your daily life.

This can drive people crazy and/or violent. 

BandGap's picture

No shit, parallel realities. Hell, I'm doing this myself - trying to be upbeat and positive for the most part, all the while preparing fro some inevitable, and unknown, change.

nick howdy's picture

I just try to align myself with what I think is truth...I believe nothing...

I find that those in power,  depend on you believing... In Religion, Government, These systems of dependence, Ideologies all of them...

It's all illusion...The truth is we are not free, controlled in many ways, and most of the things we believe are false or have proven not to work and instead of realizing this truth, we deny it.

Prepare for the worst from our "leaders", the best is something you need to try to do...Never deny what is..No matter how it makes you feel.

insanelysane's picture

Are we all expecting "Jobless claims fall 15,000 to 380k as the previous week's number was revised upward to 395k"?

orangedrinkandchips's picture

Thank you Tyler.....SSDD.....needed that laugh this morning....SSDD indeed!

Kaaos's picture

Quote "initial claims, which are expected to decline to 375-380,000 from 386,000 last week. Instead what will most likely happen is a print in the mid to upper 380,000s, while last week's number will be revised to a 390K+ print, allowing the media to once again declare that the number was an improvement week over week. In other words, SSDD."

That couldn't be the more spot on. Last week rewised to 389K and now 388K, thus decline 1K!