QE-Off, Reality-On But Merkel/Van Rompuy Save The Day (For Now)

Tyler Durden's picture

UPDATE: ES at day's highs - alone in its exuberance relative to risk assets.

We watched, we dipped, and then we ripped. Disappointment at no new QE drove Silver down first, then Oil and then the rest of the risk basket tumbled notably. EURUSD dumped 60pips, ES dropped 7-8pts to Monday's close, Treasury Yields dropped 6-7bps, Commodities (Gold, Silver, Oil, Copper) all fell 1-2% (with Silver worst). But then we ripped as Van Rompuy and Merkel started chatting about some progress in Europe. This pulled EURUSD up to unch, Gold and Silver retraced half of their spike down, stocks recovered all of their drop and reached up to VWAP (rather conveniently) where selling volume re-appeared. Notably, only Treasuries remained near their spike levels. As we post, the recovery spike back up in risk assets is now fading. Now get your popcorn ready for Bernanke's presser. Finally, the issue with the European stick save, where Gollum mentioned Eurobond lite again, is that it is merely a regurgitation of news from Sunday, which Germany has already said Nein to: In The Case Of The World Vs Merkel, The Broke Prosecution Proposes Eurobonds Lite.

Cross asset class rebound...

but be careful as ES is merely back up to VWAP...

Charts: Bloomberg

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Jay Gould Esq.'s picture

The major U.S. indexes are well in the green as of this writing.

What an utterly dysfunctional market. "Price discovery" is now nothing more than a quaint, old-fashioned notion.

NotApplicable's picture

Now, look at the size of those dips and just imagine how much wealth just changed hands at the margins. (hopefully all algobots engaging in cannibalism)

Cursive's picture

What else is there to say?  Ridiculous.

bdc63's picture

How on earth is the Euro/$ trading at 1.27?! ... unfreakinbelievable

Cursive's picture


Why?  Because they can.  The market has always been a rigged game in favor of the market makers.  They are having a field day rigging this shit.  But it won't last.  Nothing is forever and their hubris is about to catch up with them.

NotApplicable's picture

Given that it's merely a relative measure, they can make that number practically anything they want, within "reason."

Meanwhile, in absolute terms, prices of all non-paper things will continue to rise.

Got Things?

q99x2's picture

I don't have things but I have a lot of forks and knives and I'm motivated to start cutting something.

HelluvaEngineer's picture

Quick!  Hit everyone's stop orders!

HarryM's picture

Board is Green


Score - Fed 80     ZH'rs - 0

Game over (as usual)

Thomas Anderson's picture

Van Rompuy and Merkel readies the ESM Bazooka... dud, and markets dive when The Bernanke begins to speak.

q99x2's picture

Board is Red again.


Game not over till Fat Lady sing.

DavidJ's picture

So many twists and turns!

One day the drunken dancer will collapse!

bdc63's picture

Chinese Proverb: 'May you live in interesting times'

I don't know about you all, but I would LOVE a little boring right about now ...

kridkrid's picture

Though there is debate over the origin, it's usually considered to be more of a curse than a proverb.  It works either way, I think.

Mrmojorisin515's picture

It was exciting in 08, 09, and 10, but the past two years have been very boring

CreativeDestructor's picture

Fed Bots are Busy.... 

i_call_you_my_base's picture

Must be a coincidence.

FXPortent's picture

Let's do the twist! And party and dance like it's 1999!

NotApplicable's picture

Yer avatar done hypnotized me!


VonManstein's picture

merkel saved the day... riggghhtt.. considering we have been "expecting" carnage without QE im not sure a little merkeling could levitate things so much..

perhaps people are just fed up with dollars and bonds?? whos gonna buy these things if the FED wont buy them from you with more QE??

the market has to come round soon

VonManstein's picture

gold pushing back at 1620.. and ZH is telling us this is merkel and rumpoy?? pfff dont think they can move markets like this anymore

sharky2003's picture

I'm so tired of this song and dance. Someone please pull the plug already!!!

bigwavedave's picture

The House wins. JPM up 3.5% - 4%


We are really into QE 50. We will never ever know the truth..about anything.


Lost Wages's picture

What I've learned after watching the markets astutely is that the most boring thing possible will always happen. This stuff has lost its excitement. I'm going to go do something else.

gjp's picture

Market doesn't give a flying fuck about bimonthly official announcements for the plebes.  Market gets free money every freaking day from its toadies at the central banks / government to support its stupid momentum short face-ripping games.

BlandJoe24's picture

Have they ever presented something at the press conference that was very different from the official announcment?  In other words, is it possible that a bigger qe program will be announced at the press conference?

Conman's picture

rally on - why again? oh well. just rally on. dow13k hat on.

asteroids's picture

In the last 24hours the market has gone absolutely..... nowhere. The FED did nothing, and won't do anything before Obama is thrown out of office.

LawsofPhysics's picture

Right, to be replaced by Rhomney.  That's a good little sheep.  One party, for the banks and financial houses, by the banks and financial.  There is no "market" with mark to fantasy in place.  Price discovery, what's that.  The prices are set by TPTB.

ZIRP is fucking QE, unless you rally believe there is no cost for creating capital, especially when nothing of real value has been created.  Totally fucking stupid.  Printing to pay interest and save the banks and financial houses.  Failure and consequences are for you, not them.

takeaction's picture

Obama out of office....HAHAHAHAHHAHAHAHAHAHAHAHAHHAHAHAHAHA...yeah right.  This thing is so rigged.  Here are some facts for you.  300 million people in the USA..right?  Only 112 Million Vote.....47 million people on food stamps....promise those 47 million more FREE SHIT....or maybe $3 grand each....And we have a winner.  Then to top it off....just grant 1,000,000 illegal alien kids amnesty, and then they and their parents, and all of their relatives as a thank you vote for you know who?  If you give amnesty to 1,000,000 illegal kids, how many votes will that get you?  It is quite exponential.  I see what you did there Obama.  Good play.

Spaceman Spiff's picture

Didn't operation twist really boost the market last year?  or was that the european solution/ltro that did that?

Plymster's picture

Operation twist boosted the market slightly, but the big shot was the LTRO combined with Fed liquidity swaps.  That way the Europeans could spread the risk around to the US as they bailed out their shitty banks.

Since the Fed already owns most of the long end of the curve, and the European piggy bank is queefing dust, there's no reason to buy a thing (except puts) right now, unless Bernanke unveils a new QE program at 2:30.  So who are these buyers and why are they buying?

Spaceman Spiff's picture

Thanks for the clarification.    I need to write this stuff down to keep up with all the manipulations/interventions.  

LawsofPhysics's picture

No manipulation, none whatsoever.  < sarc off >

caimen garou's picture

blah,blah,blah,blah,fools are saying anything to keep markets pumped

HaroldWang's picture

Fed left door wide open for QE. Europe door open for some sugar. Market can ONLY go up until this rhetoric changes. Until then, up, up we go!

CvlDobd's picture

Days like this give credence to robo's claims that Ben is the greatest central banker of all time. How the fuck they keep this many plates spinning is beyond me.


bigwavedave's picture

"There are no plates" -- The Oracle (paraphrased)

CvlDobd's picture

Oh, are these not the plates I'm looking for?

VonManstein's picture

check the fucking miners out..

this is the start of a big move... no more games

falak pema's picture

all this fast and furious market play is so sensitive to the lightest flutter of butterfly wings, one wonders why the tsunamis are not more frequent. 

Father Lucifer's picture

Once the denial and shock subside we will see the true results of NO QE this year. ZH called it again, except that part about 4 year notes but all is forgiven in the name of

daneskold's picture

The simple math on this debacle is that the U.S. deficit spend of $1.7 Trillion annually is a MONSTOR QE.  After those dollars rattle through the system, they've got to land in someone's account.


Are we going to see deflation?


Not until that deficit spigot ends.


This $267 B Twist extension is a mere boil on the butt of that deficit spend.


You can be certain the Santa Obama is going to promise a few more $3,000 thingamajig credits to the masses quid pro vote for me in November.

lemonobrien's picture

that's the rest of the money til the deficit ceiling is hit; than we have real (direct) QE

Village Smithy's picture

ZIRP + high short interest = continuous short squeezing. Check Tylers' post FOMC chart, the market didn't peak until 2or 3 days after it was disappointed.