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What Does European Credit Know That Stocks Don't?

Tyler Durden's picture





 

European credit markets are near one-week wides, having tumbled dramatically since yesterday's open. Investment grade credit is leading the charge followed by senior financials as professional investors look for macro protection - we suspect ahead of this weekend's election. However, European equities are modestly higher from yesterday's close and remain higher than Friday's close. Credit markets had their own dead-cat-bounce at the open this morning but that has since faded significantly, so for now, as we have said again and again 'credit anticipates and equity confirms', it seems credit is seeing something a little less sanguine ahead for now. In the meantime, Spanish and Italian sovereign debt is pushing higher in yield (Spain +74bps from yesterday's open to euro-era record highs) and Swiss 2Y rates have hit a new record low at -36.6bps.

European equities (dark blue) in a world of its own compared to credit as investmnet grade credit (impacted by financials obviously) are at one week wides.

and European sovereign spreads are all bleeding with Spain (and Italy) now over 70bps wider than their open yesterday...

 


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Tue, 06/12/2012 - 10:13 | Link to Comment Dr. Engali
Dr. Engali's picture

Is there something going on in Europe I should know about? Did I miss the soccer match?

Tue, 06/12/2012 - 10:15 | Link to Comment camaro68ss
camaro68ss's picture

And.........Its gone!!!!!!

Tue, 06/12/2012 - 10:20 | Link to Comment SilverTree
SilverTree's picture

Gold has a nice boner today.

Tue, 06/12/2012 - 11:22 | Link to Comment surf0766
surf0766's picture

Someone knows something. No news and +100  .. yea right.

Tue, 06/12/2012 - 12:53 | Link to Comment The Monkey
The Monkey's picture

Time again for the QE rally, which will knock out many shorts, weaken the dollar and move funds into risk (even Spanish & Italian bonds and banks).

Will be interesting to see how far the Fed goes.

Tue, 06/12/2012 - 11:14 | Link to Comment Winston of Oceania
Winston of Oceania's picture

Gold oil and wheat are the stock of war, I hope the idjits in Washington have been as prudent as our neighbors in Asia. Yes I still think Turkey is part of Asia, silly me...

Tue, 06/12/2012 - 10:11 | Link to Comment dereksatkinson
dereksatkinson's picture

Turkey Monetized gold and made it a tier 1 asset... 

Tue, 06/12/2012 - 10:19 | Link to Comment kridkrid
kridkrid's picture

they're going to be pissed when they discover that their tier 1 asset isn't backed by anything.  

Tue, 06/12/2012 - 10:27 | Link to Comment SilverTree
SilverTree's picture

 

http://www.goldcore.com/goldcore_blo...d-turkish-bank Quote :

 

Turkish people can pay in gold in certain foreign exchange houses and most jewellers will accept gold as payment. Turkish banks are is now offering digital gold saving accounts.

Turkey expanded its gold reserves by 29.7 metric tons in April. Turkey’s bullion reserves climbed to 239.3 tons last month meaning that Turkey increased their gold reserves by 14% in April.

The central bank on March 27 doubled the share of lira reserves banks can hold in gold to 20%, saying it would provide 6.1 billion liras ($3.3 billion) of extra liquidity.

"This addition," the WGC says, "was the result of a policy change under which the central bank will now accept gold in reserve requirements from commercial banks to help the banks utilize their gold in managing their liquidity."

 

 

Tue, 06/12/2012 - 10:11 | Link to Comment Cursive
Cursive's picture

I know the title of the post is a rhetorical question (and I love everytime it is posted since I don't follow credit markets that diligently), but I'll just add that credit markets are much bigger than equity markets and, therefore, much harder to manipulate.

Tue, 06/12/2012 - 10:13 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Mostly, it is that bond traders are smarter.

Tue, 06/12/2012 - 10:22 | Link to Comment Eclipse89
Eclipse89's picture

I hope this ignorance gap to keep rinsing and repeat as it worth a lot.

Tue, 06/12/2012 - 11:24 | Link to Comment RazvanM
RazvanM's picture

Yeah, the bond traders were very smart buying Greece debt and getting The Haircut.

Tue, 06/12/2012 - 14:15 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

I think you mean Canadian pension consultants, not bond traders.

Tue, 06/12/2012 - 10:15 | Link to Comment CcalSD
CcalSD's picture

I'm sensing a pattern here...

Tue, 06/12/2012 - 10:14 | Link to Comment Conman
Conman's picture

Bloomberg reporting Fitch Cuts Long-Term Ratings on 18 Spanish Banks

Tue, 06/12/2012 - 10:16 | Link to Comment CreativeDestructor
CreativeDestructor's picture

Every village has one idiot. Equities is the idiot of the financial village.

Tue, 06/12/2012 - 10:26 | Link to Comment BlandJoe24
BlandJoe24's picture

Tyler, thank you!  Your ZH postings alerting us to moments when "credit anticipates and equity confirms" have been very helpful.

Tue, 06/12/2012 - 10:36 | Link to Comment HarryM
HarryM's picture

Sorry I can only give you 1 thumbs up , or I'd be hitting the thumbs up like a lab rat hitting the lever for more cocaine.

Tue, 06/12/2012 - 10:19 | Link to Comment pleseus
pleseus's picture

Equities are in a world of their own HFT making.

Tue, 06/12/2012 - 11:12 | Link to Comment Winston of Oceania
Winston of Oceania's picture

But but HFT's provide liquidity to the market. Who knew you'd need boots for all this liquidity?

Tue, 06/12/2012 - 10:21 | Link to Comment ruffian
ruffian's picture

what does GOLD know? verticle launch............

Tue, 06/12/2012 - 10:23 | Link to Comment junkyardjack
junkyardjack's picture

Rinse wash repeat...

Tue, 06/12/2012 - 10:22 | Link to Comment bigwavedave
bigwavedave's picture

Im thinking of lending Spain some Euros at 7%..................................... Nah

Tue, 06/12/2012 - 10:22 | Link to Comment junkyardjack
junkyardjack's picture

Must be the same thing that oil and most of the other commodities knows....

Tue, 06/12/2012 - 10:23 | Link to Comment fonzannoon
fonzannoon's picture

CNBSHIT is actually reporting Germany demanding gold as collateral. Still those bucket heads can't connect the dots to what gold is and what purpose it serves. They will now talk about bank runs and then question where that money is going to go. Astonishing.

Tue, 06/12/2012 - 10:23 | Link to Comment my puppy for prez
my puppy for prez's picture

A GREAT video commentary on many things concerning the back story to current crises from money, war, and politics:

http://www.youtube.com/watch?v=JFZGMWJUc4I

Tue, 06/12/2012 - 10:26 | Link to Comment marketcycles79
marketcycles79's picture

My friend has been very good at seeing recent turns in the market and has helped keep me on the right side of the tape. - humblestud????????????????e?n?t Jun 10, 2012 weekend report:
<< the roadmap is progressing very well, near identical to the pattern.

 

http://humblestudent777.blogspot.com/

Tue, 06/12/2012 - 10:26 | Link to Comment lolmao500
lolmao500's picture

Stocks are on the kool aid.

Tue, 06/12/2012 - 10:35 | Link to Comment Village Smithy
Village Smithy's picture

Obviously European credit don't have a PPT that is as well endowed as our own.

Tue, 06/12/2012 - 10:47 | Link to Comment brooklynlou
brooklynlou's picture

Jerry, it was shrinkage! Shrinkage I tell you.

Tue, 06/12/2012 - 10:43 | Link to Comment crshinn
crshinn's picture

I think the stock markets just figured it out.  Red is the new green.

Tue, 06/12/2012 - 10:47 | Link to Comment slaughterer
slaughterer's picture

Profit from the crash only if you got the cash.  

Tue, 06/12/2012 - 11:41 | Link to Comment PeeramidIdeologies
PeeramidIdeologies's picture

Cash on the sidelines is a popular phrase. The Greeks know it.

Tue, 06/12/2012 - 10:49 | Link to Comment slaughterer
slaughterer's picture

Market today is an inverse overlay of 


GSPG10YR:IND

Tue, 06/12/2012 - 10:50 | Link to Comment Conman
Conman's picture

PPT stick save!!! Right on time!

Tue, 06/12/2012 - 10:58 | Link to Comment Snakeeyes
Snakeeyes's picture

All of Europe is up in the sov arena this morning. Nice bailout!

http://confoundedinterest.wordpress.com/2012/06/12/fitch-warns-europe-spanish-yields-spike-no-qe3/

Tue, 06/12/2012 - 11:13 | Link to Comment surf0766
surf0766's picture

WHat turn everything roses all of a sudden?

Tue, 06/12/2012 - 11:27 | Link to Comment nolla
nolla's picture

I think one factor affecting European equity bullishness is the quarterly OpEx. this coming Friday. Has been a proven pattern (every time up) since mid last year.

As should be the upcoming end of the quarter, 6 months reports and updates - HFs need to window dress those.

Tue, 06/12/2012 - 12:31 | Link to Comment Mugatu
Mugatu's picture

I am short Spanish Bonds and long Ugandan Bonds.  Already have a nice profit.

Tue, 06/12/2012 - 13:10 | Link to Comment q99x2
q99x2's picture

Bad European credit is good for stocks if you are short and stocks go down from here.

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