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The Punch Line: "Crash Test - Bracing For Breakup"

Tyler Durden's picture




 

And now it is time for our favorite monthly chart-only newsletter, The PunchLine by Abe Gulkowitz, who unlike the momentum chasing crowd which has an attention span measured in inverse significant digits, and has a brokerage account (but endless monopoly money) that is even smaller courtesy of always being on the receiving end of a market which actually needs commission payments on both sides of those candle charts, sees well behind the headlines designed to sucker in the feeble minded twitter-traders, and presents it all with gorgeous, chartific clarity. And the only thing better than the insight of his hand-picked charts is the focus of his narrative, which speaks volumes without actually speaking volumes: "European banks are dumping government debt, deposits are draining from south European banks and a looming recession is aggravating the pain, fuelling doubts about the survival of the single currency in the European zone. Between the bookends of economic data points, rating agency actions, and political developments - - market gyrations are seriously affected by policy directions. A key consideration for any 2012 forecast is the impact of public policy on risk premiums and business confidence. Persistent fears of major policy missteps could come to a head at any time regarding the U.S. fiscal nightmare and Europe’s responses to the sovereign and banking crisis. One now needs to believe that the policy environment – both in the US and Europe – could serve as significant headwinds to growth in 2012."

He continues:

Out of respect for the power of policymakers ahead of another EU summit, market sentiment has shifted wildly on the crucial developments in Europe along with the continued chatter of EU leaders. Indeed, investors actually responded rather favourably to Italy’s recent bond auction results. They got the money. Despite paying yields well above the precarious 7% threshold, the auction placed close to 7.5 bln euros in 3 and 10-year bonds at yields of 7.89% and 7.56%, respectively. With all the scare emanating out of Europe and elsewhere, the U.S. ends up looking good again. But even with some better data recently in the U.S., many have become more concerned about the sustainability of the recovery next year. This is true for corporations, but even the Federal Reserve is now considering scenarios that would have been unthinkable even earlier this year. The global economic recovery is looking more like it is running out of steam, leaving the EU stuck in a constrained growth path. Tighter financial conditions, the growing threat of rapid bank deleveraging and the protracted policy makers’ bickering are likely to result in a weaker 2010-12 recovery path in the EU, and the risk of many other regions following suit. While solid growth in big emerging economies would provide a supportive boost, there is already evidence that  slumping global trade could drag down even Chinese output. Many now project world trade growth to slow to only 4.8 per cent in 2012 from a likely 6.7 per cent this year.

Full must scan chartpack 

 

 

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Wed, 11/30/2011 - 18:56 | 1932937 Manthong
Manthong's picture

El-Arian: “  (the new liquidity policy) “it lowers the cost of emergency financing and it increases the scope of emergency financing”.

Um… emergency financing?...  

Apparently, it doesn’t seem to remove the emergency, it just makes is easier to borrow more money during the emergency. And unless I read this wrong, too much borrowed money IS the emergency.

He also uses the term “breakage”.

I didn’t hear the term “FIX” anywhere.

http://media.bloomberg.com/bb/avfile/News/Surveillance/vSo3xdfIVMYc.mp3

Wed, 11/30/2011 - 19:00 | 1932953 phungus_mungus
phungus_mungus's picture

No it doens't address the emergency at all, this was a hail mary pass to buy the global economy enough time (10 days) for the EU to get its house in order... which we all know is a pipe dream, will never happen.

So basically this has bought us a few more days before the shit storm makes landfall. 

Wed, 11/30/2011 - 19:01 | 1932958 GeneMarchbanks
GeneMarchbanks's picture

Shitstorm cometh.

Wed, 11/30/2011 - 19:06 | 1932971 slaughterer
slaughterer's picture

I would say tomorrow already there wil be signs of "shitstorm."  I am not saying exactly what, but it is already scheduled into the economci calendar, waiting to hit the fan.

Wed, 11/30/2011 - 20:10 | 1933164 redpill
redpill's picture

OT: These are the tiny slices of civil dissonance that make me perk up and believe we have a chance:

 

A 103-year-old woman and her 83-year-old daughter got a last-minute eviction reprieve when sheriff's deputies and movers decided they couldn’t uproot the women from their longtime Atlanta home.


http://usnews.msnbc.msn.com/_news/2011/11/30/9122056-deputies-refuse-to-evict-103-year-old-woman

Wed, 11/30/2011 - 21:49 | 1933472 Miss Expectations
Miss Expectations's picture

The out of work employees of Steven J. Baum would gladly step in and help move this 104 year old woman to the curb.  They loved their work.

Wed, 11/30/2011 - 22:34 | 1933589 flacon
flacon's picture

Hello all, 

 

I highly recommend that you all watch these videos. This is the most revealing knowledge that I have injested since reading John Perkins book "Confessions of an Economic Hit Man". 

 

Exchange Stabilization Fund 

http://www.youtube.com/watch?v=2ssrcD5GdPQ

http://www.youtube.com/watch?v=ImuVUab6WW0

http://www.youtube.com/watch?v=8Qsll_5-FXc

http://www.youtube.com/watch?v=iK-741ISz94

http://www.youtube.com/watch?v=lQf-u2nCVSw

Thu, 12/01/2011 - 00:03 | 1933824 jackinrichmond
jackinrichmond's picture

holy shit..

some interesting thoughts in those vids

Wed, 11/30/2011 - 20:12 | 1933168 Fazzie
Fazzie's picture

 The storm needs a name for posterity, how about "El Feco" ?

Wed, 11/30/2011 - 23:45 | 1933778 Cthonic
Cthonic's picture

Give it a sovereign Italian ring... "Tempesta d'Defecazione".

Wed, 11/30/2011 - 20:36 | 1933236 stirners_ghost
stirners_ghost's picture

You know what a shit barometer is, Bubbs?

Measures the shit pressure in the air.

Wed, 11/30/2011 - 20:18 | 1933180 Sunset chaser
Sunset chaser's picture

The charts tell the story here.  THe indices broke down out of a head and shoulders and went straight into a classic broadening formation, signalling a crash dead ahead.  It's a good bet that today will look like opportunity lost soon enough for those who covered.

 

<img src="http://www.flickr.com/photos/57106744@N06/6433538107/" />

 

http://books.google.com/books?id=WjuKiLTy9aYC&pg=PA31&lpg=PA31&dq=broade...

 

Wed, 11/30/2011 - 20:52 | 1933306 Buck Johnson
Buck Johnson's picture

This is becoming a classic crash scenario.  This game is about to end.

Wed, 11/30/2011 - 18:55 | 1932939 non_anon
non_anon's picture

breaking up is a hard thing to do

Wed, 11/30/2011 - 19:01 | 1932952 slaughterer
slaughterer's picture

Anybody who uses the emergency financing will get shorted ruthlessly by all the other banks.  That is another problem.  El-Erian has never had to deal with such situations, being employed by Harvard Endowment and Pimco.   

Wed, 11/30/2011 - 19:47 | 1933102 CPL
CPL's picture

Exactly.  These people only know the bull market in the demographic they reside.  The ivory tower they live in was done by the largest social welfare state extension, I would even guess by now larger than the USSR had ever been.

Wed, 11/30/2011 - 19:03 | 1932959 slaughterer
slaughterer's picture

ZH missed two interesting news pieces today:

1.) Getco bought BACs MM business.

2.) Blankfein might get deposed from his CEO position as a result of insider trading now being investigated in relation to Raj.  

Wed, 11/30/2011 - 19:06 | 1932978 Tyler Durden
Tyler Durden's picture

Actually the only important piece of news we missed today is the following:

EU monetary chief sees 10 days to rescue euro zone

The euro zone is entering a critical 10-day phase that could go a long way to dictating its future, the currency bloc's economic and monetary affairs chief said on Wednesday.

Following is a breakdown of the key events up to and including a December 9 European Union summit that is increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.

For a graphic on how markets have reacted to key European policy meetings this year, click: r.reuters.com/van64s

THURSDAY, DEC. 1

- French President Nicolas Sarkozy will make a speech presenting proposals for closer fiscal integration among euro zone members.

- Spain will tender up to 3.75 billion euros of bonds at auction while France, also now under the market cosh, is aiming to sell up to 4.5 billion euros of paper, this after Italy was forced to pay nearly 8 percent to borrow for three years this week.

- European Central Bank President Mario Draghi to present that ECB's annual report to the European Parliament.

FRIDAY, DEC. 2

- Chancellor Angela Merkel is expected to make a speech outlining Germany's vision for fiscal integration, a day after Sarkozy did the same.

- Sarkozy will meet British Prime Minister David Cameron with the key issue being Britain's willingness, or lack of it, to allow a process of EU treaty change to forge closer euro zone integration in return for the chance to repatriate some powers to London. Treaty change requires unanimous support.

MONDAY DEC. 5

- New Italian Prime Minister Mario Monti is expected to set out his debt-cutting measures in Rome, having been told by Brussels that he would have to take extra measures beyond an austerity plan already adopted to meet its balanced budget promise in 2013.

WEDNESDAY, DEC. 7

- Centre-right EU leaders meet in Marseille for two days. Merkel, Sarkozy and incoming Spanish premier Mariano Rajoy will be there on Thursday as will top EU officials Herman Van Rompuy and Jose Manuel Barroso. Rajoy, not due to be sworn in until later in December, may outline some of his economic plans.

- The Greek parliament is expected to vote on its 2012 austerity budget, a crucial part of its bailout terms. Once passed, it will herald the return of the troika - comprising representatives of the European Commission, the European Central Bank and the IMF - to Athens the following week.

- Germany will auction around five billion euros of five-year debt. Last week it suffered a near failure with the authorities having to pick up about 40 percent of the paper that investors would not buy.

THURSDAY, DEC. 8

- Last ECB policy meeting of the year. A Reuters poll of economists forecast a 60 percent chance of a rate cut to 1.0 percent and a big majority said they expect the central bank to announce new long-term liquidity tenders to help keep banks afloat. The poll gave a 40 percent chance of the ECB stepping up bond purchases with freshly printed money within six months, something it has opposed so far though it may eventually have to conclude that the biggest threat lies in recession, a credit crunch and the risk of deflation rather than inflation.

- EU leaders gather in the evening in Brussels for a working dinner prior to Friday's summit.

FRIDAY, DEC. 9

- EU leaders' summit in Brussels. The focus will be squarely on new rules to tighten fiscal integration. The question is whether that will be done via time-consuming treaty change which would need to be ratified by all 27 EU members or whether a shorter cut, involving the single currency group pressing ahead alone, will be pursued. The optimistic view is that embarking on that process will calm financial markets but that is indeed optimistic. Dramatic measures involving the ECB breaking its rules by radically increasing its bond-buying support are unlikely at this point but there will surely be discussions about a way to get the IMF more involved, probably with money paid over by euro zone central banks. Analysts say a summit that falls short could lead to a harsh market reaction that could force a rapid reappraisal by policymakers, some of whom have already identified January as a potential crunch point.

Wed, 11/30/2011 - 19:10 | 1932988 slaughterer
slaughterer's picture

Thanks Tyler, all of that is certainly more important.  The twe I pointed out, I just called them "interesting."  

Wed, 11/30/2011 - 19:23 | 1933036 Manthong
Manthong's picture

Does the "shorter cut" involve Panzers and the Luftwaffe?

Wed, 11/30/2011 - 19:32 | 1933069 SHEEPFUKKER
SHEEPFUKKER's picture

December 09th.....the next last chance to save the Euro. 

Wed, 11/30/2011 - 20:01 | 1933140 yabyum
yabyum's picture

11-30-2011, Last chance to buy metals at a good price? How about beans?

Wed, 11/30/2011 - 21:18 | 1933392 whoopsing
whoopsing's picture

Yabby, a totally unscientific observation on my part that just happened to stick in my head that I hope will be helpful. On a recent grocery store visit, I noticed that the price of dried bean's was roughly twice of what I had paid on my last purchase of same ( four month's ago). I have no idea of what this might mean.

Wed, 11/30/2011 - 19:34 | 1933073 American34
American34's picture

How is deflation a concern at this point??? Why would deflation happen?

Wed, 11/30/2011 - 21:33 | 1933434 Schmuck Raker
Wed, 11/30/2011 - 19:34 | 1933076 non_anon
Wed, 11/30/2011 - 19:56 | 1933127 CPL
CPL's picture

TUESDAY, DEC. 20

-  Los Angeles and Los Alamos leveled as 500,000 invade west coast, Obama seeks resolution to Greek Crisis after golf tour in Antartica.

 

/lol/

Wed, 11/30/2011 - 19:15 | 1933011 ucsbcanuck
ucsbcanuck's picture

Blankfein will not get deposed. Rajat Gupta will take it in the ass, but Blankfein will survive as he is doing God's work.

Wed, 11/30/2011 - 19:23 | 1933034 clownfishheaven
clownfishheaven's picture

Go Gauchos?

Wed, 11/30/2011 - 20:16 | 1933175 Fazzie
Fazzie's picture

 God sells shitty CDO'os?? Talk about mysterious ways!

Wed, 11/30/2011 - 19:06 | 1932976 lolmao500
lolmao500's picture

http://www.nj.com/news/index.ssf/2011/11/number_of_nj_residents_on_food....

Number of N.J. residents receiving food stamps doubled in last four years

The number of New Jersey residents receiving food stamps has doubled in the past four years and is at its highest level in more than a decade as the nation’s still sputtering economy continues to take its toll on the poorest residents of the Garden State, state and federal data show.

http://www.post-gazette.com/pg/11333/1193300-147-0.stm

Flying to Philadelphia? Unbuckle the purse
US Airways, sole carrier starting in January, hikes fare from $118 to $698

http://www.examiner.com/law-enforcement-in-national/obama-cover-up-court...

Court records of border patrol agent murder sealed
The Obama Administration has suddenly and without warning sealed court records containing alarming details of how Mexican drug smugglers murdered a U.S. Border patrol agent with a gun connected to a federal government snafu that allowed firearms to be smuggled into Mexico, according to a top non-partisan organization that investigates government corruption and fraud.

Wed, 11/30/2011 - 19:13 | 1932999 FranSix
FranSix's picture

Your David Rosenberg/Gluskin Scheff fix:

Part 1

http://watch.bnn.ca/#clip577279

Part 2

http://watch.bnn.ca/#clip577280

Part 3

http://watch.bnn.ca/#clip577281

Wed, 11/30/2011 - 19:16 | 1933013 HD
HD's picture

So what's the half life of this? So the Fed gave a hopeless drug addict a black American Express card and told them to clean up their act...seems like a solid plan right?

Wed, 11/30/2011 - 19:27 | 1933049 papaswamp
papaswamp's picture

More printing and debt is good for at least another 6 months. Ray Dalio's prediction seems to be right on track...

Wed, 11/30/2011 - 19:29 | 1933059 catacl1sm
catacl1sm's picture

Fuck the FED!

Wed, 11/30/2011 - 19:30 | 1933063 lolmao500
lolmao500's picture

All that is bullish for America. (except for the whole banking system going down thingee, but don't worry, the FED can supply the banks with unlimited money)

Wed, 11/30/2011 - 19:31 | 1933064 Fozzy Slippers
Fozzy Slippers's picture

Hang these psycho bastards. I'm sick of this shit.

Wed, 11/30/2011 - 22:03 | 1933517 Ned Zeppelin
Ned Zeppelin's picture

Well, try to look at it from the bankers' point of view. Their wives are already bitching that the Christmas bonus just ain't enough! Drastic action required!

Wed, 11/30/2011 - 19:36 | 1933078 CreativeDestructor
CreativeDestructor's picture

This was all Goldman coordinated... No one mentione that Criminal Sachs stopped out their Buy china call just a day ago and after 5% loss, and that is after calling it a buy just few days before that to place their block, and that is just when they stopped out their buy EUR call.

buy china buy eur just to fuck everyone over?

Those lowlifes make it look like they can't find their own dick with both hands.

Wed, 11/30/2011 - 19:50 | 1933112 electricgorilla
electricgorilla's picture

The only difference between now and 2008 is the storm that is either coming or already here is being prepared for instead of coming out of nowhere. Central Banks can only print so much. Inflation or should I say Hyperinflation is a bitch. Fuck are they thinking. Big woop-e-doo, central banks are offering a lower interest rate on there swap lines. Equities are acting like that is going to save the world when actually the fed doing this is a signal that shit is hitting the fan fast.

Wed, 11/30/2011 - 19:51 | 1933115 the grateful un...
the grateful unemployed's picture

In recent years, whenever the annualized rate of inflation in the commodities markets has threatened to go negative, the Bernanke Fed responded with a massive round of money printing, dubbed QE-1 and QE-2. The biggest bond dealers that deal directly with the Fed now say the central bank is poised to start QE-3, injecting even more high powered money into the coffers of the Wall Street Oligarchs by purchasing about $545-billion in mortgage securities. It’s an election year, and the Fed aims to help President Obama to win re-election by artificially inflating the value of the stock market with printed money.

That’s also good news for investors in the Gold market. Fed chief Bernanke has pumped-up the high octane MZM money supply to a record $10.6-trillion this month, thus helping to buoy Gold above $1,600 /oz. Dealers expect the Fed to launch QE-3 in the first quarter of 2012. And once Germany and France have established the United States of Europe, and are ready to launch Eurobonds, - the ECB would be expected to launch its own version of QE-1. Commodity and precious metals markets could gyrate wildly, until it becomes crystal clear to the majority of traders, that additional rounds of QE are forthcoming in Europe and the US. Once the money printing schemes are announced, other central banks would probably join the fray with their own version of competitive currency debasement. China's central bank is expected to start easing its money policy in the first quarter of 2012, which could inject added adrenalin into the Shanghai Gold market, while lifting a broad array of commodities, including crude oil, base metals, and argricultural goods.

this is from Gary Dorsch Sirchartsalot.com it all hinges on getting Barry back in the WH.

Wed, 11/30/2011 - 20:08 | 1933157 distopiandreamboy
distopiandreamboy's picture

The EU is going to announce a break up soon and a new currency will be created. Thats why all the central banks will need to be able to access each other's currency at a low rate because a new currency will buy other country's currncy in order to establish its value and rate of exchange. This will tighten liquidity further and cause a lot of printing.

Wed, 11/30/2011 - 20:20 | 1933189 Stack Trace
Stack Trace's picture

I think this is a possibility. Total head-fake to all the bulltastic pump-and-dumpers out there.

Of course I lost my ass today but I still think being short is safer than being long this market.

Wed, 11/30/2011 - 20:24 | 1933200 URZIZMINE
URZIZMINE's picture

Do any one of you bastards work for the Fed or the squid?  Just call me and let me know when its finally time to place my array of 3x and 2x shorts in the 403B.  Will Ya?

 

Wed, 11/30/2011 - 20:46 | 1933281 Auburn
Auburn's picture

Re the Gluskin interview referenced above:

 Your David Rosenberg/Gluskin Scheff fix:


Part 1

http://watch.bnn.ca/#clip577279

Which French bank was aboout to fall over today?  Any solid info comrads pls and thanks?

 

Wed, 11/30/2011 - 22:06 | 1933523 Ned Zeppelin
Ned Zeppelin's picture

Look back over reggie's posts - I'm sure he already nailed it. 

Thu, 12/01/2011 - 00:42 | 1933919 delacroix
delacroix's picture

bnp paribas, was the frontrunner

Wed, 11/30/2011 - 21:04 | 1933342 Mark123
Mark123's picture

Isn't all this just window dressing until either the Fed or ECB agrees to expand their balance sheet (i.e. print money)?  Or is this what just happened? 

 

I feel like that picture of a deer in the headlights.  Do I go long and get my face ripped off, or do I go short and get my face ripped off, or do I stay in cash and have my face slowly ripped off.

 

 

Wed, 11/30/2011 - 21:30 | 1933424 URZIZMINE
URZIZMINE's picture

Dude, No offense, but your avitar needs a little face ripped off.

Do NOT follow this link or you will be banned from the site!