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So Much For Dreams, Hopes And The European Way: Schaeuble, Merkel Warn EU Summit To Be A Dud

Tyler Durden's picture


Nobody could have foreseen this, nobody, certainly not the vacuum tubes who took the S&P for a ride for nearly 150 points. As Reuters reports, "the euro fell to a session low versus the dollar on Monday after comments from German Finance Minister Wolfgang Schaeuble saying the EU summit would not present a definitive solution to the euro zone debt crisis prompted investors to sell the single currency." No, that's not true, it's impossible. You mean all those hopes... Dashed? "A Bundesbank report saying the German economic outlook had deteriorated further also curbed some of the market optimism that had helped push the euro to a one-month high earlier in the session. The euro hit a session low of $1.3824 before recovering slightly to last trade down 0.3 percent on the day at $1.3840." And since the EURUSD and stocks trade as one... You know the rest.

More, for whom this comes as a total shock:

The euro was last down 0.3 percent against the dollar at $1.3836 after Schaeuble's comments, which dented optimism after the weekend's G20 summit that EU leaders would decisively address the region's problems On Oct. 23.


The single currency earlier hit a one-month high of $1.39148 on EBS trading platform but faced resistance ahead of $1.40. Analysts said a break above there was possible, with some investors wary of selling the currency in case of a positive outcome at the summit.


"The euro will probably go above $1.40 as we go through this week, but we could see a 'buy the rumour, sell the fact' response next week," said Steve Barrow, head of G10 currency research at Standard Bank.


"My bias would be to sell into any strength, but not aggressively".


Traders cited offers ahead of $1.3930 which could halt the euro's advance towards $1.40 near-term, followed by technical resistance at $1.3937 -- marked by a couple of daily highs hit in September -- then at its 55-day moving average near $1.3952.


The euro has recovered strongly since hitting a nine-month low around $1.3145 on Oct. 4, but its recent gains have left it vulnerable to a pullback if investors become worried EU leaders may not be able to contain the debt crisis.


"Generally investors would rather be long dollar and short euro and would be quick to reset those positions," said Niels Christensen, currency strategist at Nordea in Copenhagen.

Merkel added fuel to the fire, via Bloomberg:

Germany said European Union leaders won’t provide the quick ending to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.


German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” Steffen Seibert, Merkel’s chief spokesman, said at a news briefing in Berlin today.


Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of the emerging plan to avoid a Greek default, bolster banks and curb contagion. They set the Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.


On the summit agenda is how any recapitalization of Europe’s banks “might be carried out in a coordinated way” and how to make the European Financial Stability Facility, the EU’s rescue fund for indebted states, as effective as possible, Seibert said.

Oh wait, they had no problem with the EU Summit 150 ES points, or 800 EURUSD pips ago, eh?

And lastly, confirming that the EU is a total circus where everyone is now talking independently of anyone else, we just had that other EU unelected dictator, Barros, saying that the EU must solve the debt crisis to restore confidence. So, since there is no solution, there is no confidence?

What a truly novel concept...


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Mon, 10/17/2011 - 06:55 | 1780660 LeonardoFibonacci
LeonardoFibonacci's picture

Even Simple Jack knows that you never go full retard.  Europe is simply loaded with a bunch of liars who are out of time, money & self-respect.

Mon, 10/17/2011 - 07:15 | 1780695 Ghordius
Ghordius's picture

...liars who are out of time, money, self respect and are under pressure to lower the EURUSD, print, bail out TBTF banks and perhaps even bail out Greece

Merkel & Schäuble are doing what is in the best interests for the EuroZone at the moment: dragging their feet

Mr. King of the BoE, on the other side of the channel is doing the opposite, therefore nobody is complaining about the GBP

Mon, 10/17/2011 - 06:57 | 1780665 Cassandra Syndrome
Cassandra Syndrome's picture

<------- Bloomberg Photo on Home Page to show happy traders by day's end

<------- Bloomberg Photo on Home Page to show distressed traders by day's end

Mon, 10/17/2011 - 07:06 | 1780684 GeneMarchbanks
GeneMarchbanks's picture

It'll be a NYSE floor trader rallygasm with a CNBC cheerleader bare breasted in the foreground.

By the way you already knew this...

Mon, 10/17/2011 - 07:10 | 1780688 slaughterer
slaughterer's picture

Buy the Fing Eurocircus Dip ==>



Mon, 10/17/2011 - 09:57 | 1781071 Belarus
Belarus's picture

It's amazing that the S + P 500 is holding up so well, ridiculous. USDEUR is down. Merkel tells the market what it hasn't believed for two weeks, and so it's probably much worse than what Zh even thinks: that thre are no solutions in Europe, at least any real solutions. 

Earnings so far has sucked,  yet stock are barely down? I guess the traders are worried about missing a run over 1220? WTF. 

I guess the nuclear option needs to go off to get stocks to crack down even the slightest bit. That will happen next week as banks begin to domino. 

Mon, 10/17/2011 - 06:58 | 1780667 AngryGerman
AngryGerman's picture

#occupy wallstreet versus #restore confidence

Mon, 10/17/2011 - 06:58 | 1780668 slaughterer
slaughterer's picture

Do not worry, Citibank earnings will save the trading day today. /sarc

Mon, 10/17/2011 - 06:59 | 1780669 qussl3
qussl3's picture

This is what; the 100571037th time they've cried wolf no?

When do the villagers learn?

Mon, 10/17/2011 - 07:01 | 1780672 slaughterer
slaughterer's picture

Time to call Latour: 

"Wolf does not like Red Riding Hood. "

"Repeat: Wolf does not like Red Riding Hood."


Mon, 10/17/2011 - 07:00 | 1780671 broke433
broke433's picture

Doesn't matter, aapl is reporting. Merkel knows this so she waited until aapl blows past expectations.

Mon, 10/17/2011 - 07:01 | 1780673 disabledvet
disabledvet's picture

And those "silly Frenchmen" who bury little gold nuggets in their backyard have just pulled the cork of "some of the good stuff." We all know how this story ends.

Mon, 10/17/2011 - 07:02 | 1780675 AngryGerman
AngryGerman's picture

"some of the good stuff." = golden shower?

Mon, 10/17/2011 - 07:01 | 1780674 emsolý
emsolý's picture

Best thing they can hope for now is strong snowfall or a volcano which wound hinder and delay flights to Cannes...

Mon, 10/17/2011 - 07:03 | 1780676 Spartan
Spartan's picture

Markets are off since this came out and yet the FT and the WSJ have no mention of Schaeuble's they only report the good news, or just slow?

Mon, 10/17/2011 - 07:04 | 1780682 slaughterer
slaughterer's picture

Media blackout on bad news starts one week before earnings.  All violations carry a penalty of a pizza lunch with Steve Liesman. 

Mon, 10/17/2011 - 07:13 | 1780691 Ronaldo
Ronaldo's picture

You just ruined the thought of Pizza.  That has never happened to me in over 40 years.

Mon, 10/17/2011 - 07:03 | 1780677 Ghordius
Ghordius's picture

Ze Powers That Be want the EUR lower (hello ZH?)

Merkel and Schäuble are trying to do it by talking and dragging their feet instead of opening currency sluicegates...

Hahaha - just imagine the EuroZone in this special moment in history without the EUR

the speculation on the individual currencies would reach epic proportions

EUR - et pluribus unum

Mon, 10/17/2011 - 07:22 | 1780720 Quintus
Quintus's picture

Yeah - just imagine Europe without the Euro.

Greece wouldn't have been able to run up massive debts by borrowing money at the same interest rate as Germany.  Investors would never have trusted them without the implicit backing of the stronger currency union members.

Ireland wouldn't have had a property bubble because interest rates would have remained at levels about 3 times what they fell to when they joined the Euro, thereby keeping a lid on property prices.

Germany wouldn't have been able to build a massive trade surplus based on an artificially cheap currency.

Banks in Europe would have been much more careful about lending trillions to the PIIGS countries and would not now be in danger of insolvency and fainting in fear at the words 'Mark to Market'.

Scary stuff.

Good to know though, that the solution to all these problems caused largely by the Euro is....the Euro!

Mon, 10/17/2011 - 07:47 | 1780749 Ghordius
Ghordius's picture

I know that there are better responses to this, but let me try this one:

look up the history of Greece. They defaulted the bloody half of the time. Without currency union. "Markets" treating Greece as if it were Germany? Thank the Squid for that.

Look up which banks went into the Irish property bubble. The currency's fault if banks think they are TBTF?

Banks have to be allowed to fail - period.

This "inbalances" theme about exports misses the "who does finance the gap?"

Mon, 10/17/2011 - 09:47 | 1781042 bob resurrected
bob resurrected's picture

OK. Most banks fail through contagion and equity positions are wiped out. What happens to the depositors and pension funds, etc. that hold the banks' debt? Where does the money come from to stand up a new banking system? And yes, who finances the gap as trade imbalances again build?


Mon, 10/17/2011 - 12:02 | 1781701 Ghordius
Ghordius's picture

what, nobody gave you an answer?

only friends of TBTF here?

an answer to your questions would need a few books, but I'll try short ones

- depositors and pension funds are fucked anyway, either by deflation or by inflation, less by deflation

- "Ze money"? plenty of banks NOT exposed to Greece, for example. Thanks to fractional reserve system, NEW BANKS can be whizzed up quite easily, the EuroZone has seen this kind of "renewals" a few times last century. Look at the market capitalization of the Squid for reference, do you see hundreds of billions? or trillions?

- Who finances the gap in trade imbalances? Well, who did in the days of the gold standard? Who buys sovereign debt? At what yelds? Where is the risk, where is the reward?

Do you really think the way the banking and financial systems are working now is the only one possible?

Tue, 10/18/2011 - 04:42 | 1784352 Stylianos Kyriacou
Stylianos Kyriacou's picture

xmmm any risk analysts here?  i have a LOT of questions ;)

Mon, 10/17/2011 - 07:03 | 1780678 slaughterer
slaughterer's picture

But what if AAPL misses tomorrow?  Ha hA. 

"Wolf does not like AAPL."

Mon, 10/17/2011 - 07:13 | 1780690 qussl3
qussl3's picture

I wouldnt hold my breath for that.

Here in "lich" Asia the fruit is king, i think the sheep here herd better too.

Mon, 10/17/2011 - 07:04 | 1780680 abugarance
abugarance's picture

hey Tyler, a Sovereign CDS re-run would be a nice follow-up...Germany continuing to widen this am, as the core recouples ahead of the haircut...

Mon, 10/17/2011 - 07:04 | 1780681 broke433
broke433's picture

Seriously?!?! Why does she lie so much?!?'

Mon, 10/17/2011 - 07:05 | 1780683 slaughterer
slaughterer's picture

I think Ackermann was on the phone with Angie this weekend several times.  Ackie is pissed off at her.

Mon, 10/17/2011 - 07:07 | 1780685 Ghordius
Ghordius's picture

"confirming that the EU is a total circus where everyone is now talking independently of anyone else"

right - democracy makes markets nervous - the EU needs a dictator /sarc

Mon, 10/17/2011 - 07:16 | 1780699 Quintus
Quintus's picture

So....government can only either be anarchy or dictatorship?  

No room for a well-organised and coherently led administration that develops policy together and communicates a consistent message?

Typical response from a Europhile to any criticism of the Euro/Eurogroup.  "It may be corrupt, nepotistic, incompetent, contrary to the basic principles of democracy and economically illiterate but the alternative is HITLER! WAR! CHAOS! therefore we must grin and bear it."


Mon, 10/17/2011 - 07:27 | 1780727 Ghordius
Ghordius's picture

not exactly - hi Quintus, hope you are well!

this Europhile likes the ECB to be independent - check

well-organized and coherently led administration? No - or, better, please define what exactly you wish for...

at the moment there is pressure "to do something" - one of the few things in which a democracy is good at is "debate before committing"

"...corrupt, nepotistic, incompetent..." mmmh don't know, compared to what?

"...basic principles of democracy.." YES! Though I'd like to point out that the EU is a Club of Sovereigns

Hitler, thanks, tried out, not of our liking

War, thanks, we have our boys in Afghanistan and many other stupid places

to sum it up - ECB shall not print, and the only Euro-Monster that has to DIE is the EFSF

Mon, 10/17/2011 - 07:08 | 1780686 Dick Darlington
Dick Darlington's picture

Noyer, the most ridiculous muppet out there (well, Barroso and Van Rompuy are in the league of their own) is hitting the tape.





Mon, 10/17/2011 - 07:17 | 1780702 slaughterer
slaughterer's picture

Noyer really needs some lessons in perception management.  He just let this bomb drop:

  • ECB's Noyer says it would be unrealistic to expect a bigger EFSF Mon, 12:11 17-10-2011
  • Mon, 10/17/2011 - 07:13 | 1780687 EL INDIO
    EL INDIO's picture

    Ha ha hah ha,

    What a timing ! Just as the EURO and USD index touched their 50 dma (or almost).

    Nice to see some order in this chaos !

    Hold on to something, its gonna be violent again

    Next stop EURO < 1.30 USD


    (Oh, if got USDs and planning to buy some PMs, you might want to wait a bit. You could get Gold for $1600 or less.)

    Mon, 10/17/2011 - 07:14 | 1780692 slaughterer
    slaughterer's picture

    I am with you, but first we have to get to EURO < 1.37.

    Mon, 10/17/2011 - 07:16 | 1780698 qussl3
    qussl3's picture

    Frankly im more interested in <1600 gold, the hurts when you kick it kind.


    Mon, 10/17/2011 - 07:17 | 1780703 Sudden Debt
    Sudden Debt's picture

    I'm delaying extra purchases of pm's untill march. I taped my trigger buying finger and wait 4 to 5 more monts.


    Mon, 10/17/2011 - 07:39 | 1780754 slaughterer
    slaughterer's picture

    SD, March coincides with Kyle Bass's timeline for the onset of the Keynsian endgame.   You might want to un-tape your trigger finger before then.  Just saying.   

    Mon, 10/17/2011 - 07:51 | 1780776 Ghordius
    Ghordius's picture

    SD, just buy the same currency amount every month

    otherwise you just risk going insane

    Mon, 10/17/2011 - 07:15 | 1780694 Sudden Debt
    Sudden Debt's picture



    I thought this meeting was put in place to have other meetings to talk about a plan!!

    So no plan to make a plan?

    At least the markets like this logic and are going green once again....


    Mon, 10/17/2011 - 07:17 | 1780700 Ghordius
    Ghordius's picture

    there is a plan to sit down and talk about a plan about sitting down and talking about a plan to...

    Mon, 10/17/2011 - 07:19 | 1780709 oogs66
    oogs66's picture

    c'mon, they said ESM will now be mid 2012, isn't that enough?

    Mon, 10/17/2011 - 07:20 | 1780712 Sudden Debt
    Sudden Debt's picture

    I wonder what the lunch and dinner menu will be.


    Mon, 10/17/2011 - 07:44 | 1780762 Ghordius
    Ghordius's picture

    entree of escargots covered with gold foil, of course

    Mon, 10/17/2011 - 07:16 | 1780696 joq
    joq's picture

    I am amazed they really thought we could be fooled to actually believe they would walk on water by the end of the week.

    Mon, 10/17/2011 - 07:17 | 1780701 abugarance
    abugarance's picture

    Noyer also saying unrealistic to expect bigger EFSF...kinda like the guy after all...vive la France bitchez

    Mon, 10/17/2011 - 07:19 | 1780706 oogs66
    oogs66's picture

    Germany has finally realized that if they "solve" this, they will all be back in summits in 3 months, and this time they will have to beg for outside assistance, since no one in the eurozone will have any ability to borrow

    Mon, 10/17/2011 - 08:05 | 1780799 Ghordius
    Ghordius's picture

    last time someone had a "solution" of this size in Germany it was called "the ultimate solution" and frankly, it was not that good

    the Germans do well in NOT trying seriously to solve the unsolvable or bail the unbailable

    let Timmy scream

    Mon, 10/17/2011 - 07:19 | 1780707 jbc77
    jbc77's picture

    From the looks of it I thought today was going to be another unadulterated vapor tube melt up.

    The melt up of the past 10 days is bizarre. The majority of the time it seems like this market is so dumbed down. Then in a flash it seems to regain it senses only to melt up again on the pending collapse of the euro zone. Just doesn't make any sense and you can't even trade anymore. 10 or 12 years ago you could trade an idea or "bet" on an outcome, if you were right it paid off. Now you can be right a lot of the time but the market reacts in the opposite fashion. Personally to me, it's not worth trading stocks anymore. I just make my IRA contribution for the tax write off and keep it in cash. Closed my non-qual trading account last year and converted it to physical metals. Now I just park the IRA money in cash and save in gold and silver. What else can you do.....


    Mon, 10/17/2011 - 07:32 | 1780744 The4thStooge
    The4thStooge's picture

    if you're gonna put cash in an ira, might as well collect a dividend. wait for the next market cliff-dive and scoop up some miners.

    Mon, 10/17/2011 - 07:21 | 1780716 slaughterer
    slaughterer's picture

    Looks like the bulls will have to wait until Cannes, Nov. 3 for some kind of "final solution."  Too long a wait, IMO, and the delay pushes the EZ "plan" right in front of the US Super-Committee debt "plan" in later November, which will remind the world of how broke the USG is.  Time to press the SPY/ES/DAX/EUR/everything ejector button, me thinks.

    Mon, 10/17/2011 - 07:26 | 1780728 qussl3
    qussl3's picture

    The only solution that isnt default and rolling bank runs is ECB monetization, they know this but need the sheep to beg for it otherwise its their political hides.

    No way out other than inflation, lots of it.


    Mon, 10/17/2011 - 07:54 | 1780783 Ghordius
    Ghordius's picture

    printing is the easy way

    defaulting is the hard way

    Mon, 10/17/2011 - 07:33 | 1780745 viator
    viator's picture
    UK economy brought to grinding halt by euro crisis British taxpayers may be dragged into a rescue package for the eurozone after a leading forecaster warned that the crisis has brought this country’s economy “grinding to a halt”.

    Mon, 10/17/2011 - 07:53 | 1780782 Ghordius
    Ghordius's picture

    another purpose for the EUR

    something to blame if Blighty has troubles

    Mon, 10/17/2011 - 08:02 | 1780795 plantigrade
    plantigrade's picture

    Europe shows once again the utility of not being completely unified: the truth still finds its way out. That is a positive, not a negative.

    Mon, 10/17/2011 - 12:06 | 1781716 Reptil
    Reptil's picture

    bingo and that's what they want to "fix" with the ESM (European Stabillity Mechanism)
    if they succeed we're toast, we'll be "ruled" by Barroso and Van Rompuy.

    Mon, 10/17/2011 - 08:38 | 1780868 Scalaris
    Scalaris's picture

    German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,”


    See, she says that, but I can't help but laugh hysterically* with FTSE's 600pt hope-gasmo-pump since Oct 5th.



    *Note: I do not laugh hysterically, not one bit. 


    Mon, 10/17/2011 - 08:56 | 1780913 rubearish10
    rubearish10's picture

    Negative comments are scripted to slow down the momentum and leave room for more upside. TPTB don't want things to look too good. After all, we're at the high end of the ttading range.

    Mon, 10/17/2011 - 09:27 | 1780986 falak pema
    falak pema's picture

    merkel plays hard to get fair lady in the tower from medieval days. Come sing to me Meistersinger...woe me...Timmy to save the Euro n the greenback!

    Mon, 10/17/2011 - 10:15 | 1781136 slackrabbit
    slackrabbit's picture

    i haven't lost confidence.......i am still confident this whole fiaco will fail.

    btw anyone one know how to short japanese bonds?

    Mon, 10/17/2011 - 11:23 | 1781491 HD
    HD's picture

     "EU summit would not present a definitive solution to the euro zone debt crisis prompted investors to sell the single currency." No, that's not true, it's impossible."


    ...Search your feelings Tyler - you know it to be true.

    Mon, 10/17/2011 - 11:54 | 1781658 JLee2027
    JLee2027's picture

    They have no solution but hot air.

    Mon, 10/17/2011 - 12:07 | 1781724 Iwanttoknow
    Iwanttoknow's picture

    I was foolish enough to buy some GLD at 173.76.What shold I do?Any well thought out advice is much appreciated.

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