Zee Price Stabeeleetee: From Bear Market To +20% In Under A Month

Tyler Durden's picture

Remember the bear market? The 20% drop from the July highs to August and most recently October 4th lows has seen a major retrace in the last 3 weeks as we managed to gain 20.7% from the 10/4 lows to the highs of today. Risk was definitely on today though it felt much more like capitulation - especially in credit - than new longs being laid out. Everything was bid so an end of day comment is somewhat redundant but we would note that HYG underperformed HY and equities (hedges being laid out again?), quality IG new issues were active (but not HY), and commodities tore higher. TSY yields smashed higher (especially post a weak auction) with everyone's favorite carry trade (2s10s30s) jumping once again. The EUR dominated FX markets with FX carry driving ES to a huge day but interestingly (for once), despite the huge up day in stocks, HY and IG credit outperformed - narrowing that gap. IG was the best performer (beta adjusted) overall - dramatically outperforming with a 14bps compression (over 5bps rich to fair-value).

Its perhaps worth remembering what occurred the last time we were told that all is well and civilization can go back to donut-stuffing and iPad-buying. March 2008, when Bear Stearns was rescued, set up very similarly and peaked just above that 200DMA before beginning the reality-soaked free-fall that we all remember so well. Its perhaps of note that this period fits with our earlier chart of EPS rolling over.


Into the close, as one would perhaps expect, we saw some covering and retracement in every risk asset and a modest buying pressure in TSYs - even though silver and gold remained near their highs. HYG closed near its low of the day - having sold off right from its gap higher open. There was only modest net buying in HY corporate bonds and no new issuance while IG saw significant issuance which likely impacted the significant net selling we saw in investment grade bonds. Given the relative cheapness of IG and HY credit to stocks, the index moves make sense but the major net-selling in investment grade bonds (especially financials) while tempered by switches thanks to new issues, was very interesting and makes us wonder if buy-siders managed to bring out their dead and sell into strength for month-end on this exuberant day.

Morgan Stanley, which managed an incredible equity rally today was very timely with a sneaky $2.5bn upsized 10Y deal today at T+335 (which came modestly cheap to current CDS) and probably helped it top the most net sold list in secondary bonds are managers switched.

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achmachat's picture

I wonder if he reads ZH... right now he is probably practicing in front of a mirror:

zeee price stabeeleeteeeee

zee price stabeeleetee

zee price stabiliteeee



GeneMarchbanks's picture

'ZNot my folt, blame zee Bernankeeeeee'

He followed up by saying:

'At least I have chicken'

danger close here's picture

All in the meantime this bipolar site spouted doom, costing people thousands. How's that working out for you. Must be those record retail shorts, lolz.

achmachat's picture

you might be little short-sighted.

tell me how your longs work out in a month or two.

SeverinSlade's picture

ZH just reports truth...And we all know that truth doesn't rule these totally inefficient markets.

ZH did also recently note that short interest in the EUR had jumped, suggesting that the melt up rally could continue...They also did warn of the short covering rally back about a month ago when short interest in the NYSE was near 2009 levels...

If someone traded purely on the truth then they got their asses handed to them.  ZH never told anyone to open a short position on Oct. 4th.  In fact, they suggested to consider covering any shorts that anyone may have had...

GeneMarchbanks's picture

Good point. WHy?! Ohhh WHy?! I ask my self... didn't your mother swallow?

mynhair's picture

(Crud, screen spew.  What a waste of good beer.)

Irish66's picture

let us know when you wake up

rocker's picture

Sounds like you have access to Goldman Sach's special software to know so much.

Cash did not go down at all.  PMs rose nicely.

Why would you care if you don't agree with the wisdom of Zero Hedge?

TradingJoe's picture

Bubba, I am certain most if not ALL folks reading this blog, are in control of their finances! Are you?!?! No ofense but i just hate it when some think, others are stupid, I for one did not "miss" the fiat avalance coming, I just did it from the PM side :))! And now of course I will look to short SOME MORE into this maniac low volume melt up, been there done that, capisci?!?!

DormRoom's picture

trade with the herd/market, but you should see if you're following the herd off a cliff.  Atleast know how far from the edge you are.


prains's picture

danger close here


buddy there's a dorkasaurus closing in on you, no not behind you, in the mirror

barnabeg's picture

What a tool. Market rallies an a bailout plan and you think everything is fixed. Never seen this before.

cowdiddly's picture

Yes you guys are braver than I am. It looks insane to me. Im taking my toys and going home. GLTA We have levitated to within about 1800 points of the alltime high with a quarter of the people not working, CDS's found to not be an insurance policy at all and as such defeat their purpose and have no need of buying them if they do not have a payout.  Quarterly profits not spectacular and 46mill needing snap.Every western bank is for all practical purposes, insolvent. And, we still do not know where all the bailout money will come from. UNFUCKINGBELEIVABLE. The only thing different from a year and a half ago when the first Greek bailout occured is the banks have agreed to lose 50% on paper that is 100% worthless. ROCK ON.This market needs a healthly sniff of reality.

     I would load up short but we are tired of getting kicked in the nuts by Uncle SAMBO. Everyone is gun shy. Without the shorts to buy in on the drop this thing could drop 1000 points in 10 minutes. 

The sad part is 75% of stock gains for the day come at the opening bell before any meaningful trades take place. CORRUPT TO THE CORE.

deebee's picture

add to that the dwindling number of big funds that are able to profit or even keep clients from cashing out.
Goldman's 'alpha one' closing any day now...

cowdiddly's picture

Its like they are saying. Oh you want to trade that news? It will cost you 5% to play today and we will let you in for the last 1% if you are willing to pay up. KISS OFF

John Law Lives's picture

Yes, it seems insane. The bottom line is the Fed does not have the tools to create the millions of good jobs needed to make the US economy whole again. All they know how to do is devalue the currency via fiat currency creation and try to pump the markets in the hopes of creating some wealth. They do not appear to give a damn about the middle class and lower class of people who are choking on the real inflation that the Fed wants to pretend does not exist.

The Great Chairsatan = Psychopath

SheepDog-One's picture

I only invest in commodities now. 

DoChenRollingBearing's picture

Actually, yes!

At your pmbug.com site anyway, thanks for the help in getting me set up there.

The Bezring likes what he sees at pmbug.com and encourages people to take a look!

CClarity's picture

These aren't markets, these are interventions.  If can't/won't be nimble, best to get out of the way until a semblance of rational market returns.  Unmedicated and at least LESS manipulated.

bernorange's picture

Oh I agree.  My question was facetious.  I probably should have added "/deadpan" or something to make it clear.

slewie the pi-rat's picture

how many malls do you own, danger_c_h?

mynhair's picture

I have a piece of one, wanna buy me out?  Purty pleeze?

Ya don't get my Goobermint building, tho.

J 457's picture

"Costing people thousands."  Oh please, some people here hold a heavy hand. We're talking millions between all the combined readers, so give them some credit.  Some days are up, some are down.  Stick with the fundamentals.  Has anything really changed in the last 24 hours, other than more taxpayer risk/debt via bail-outs?  Right or wrong, I shake my head at these type days in disbelief.  In the US, do we still have 6mm homes in distress, unemployment at 16%, 1.4 trillion annual deficit, 600 billion annual trade gap, and 15 trillion in debt.  And those are the "short-term" problems, not the long-term issues like SS, Medi-Care, pension funding, and interest on debt.  Fix those problems and I will be bullish.  Until then, you are only kidding yourself. 

SeverinSlade's picture

ZH should seriously create a Project Mayhem comprised of its readers.  OWS would look like a bunch of whining babies compared to us.

And unlike OWS protestors, readers on this site actually have a substantial amount of capital, as you have pointed out.

I'm ready and willing to become a Space Monkey.

Although we do more damage by withdrawing physical PM supply from the market with our FRN profits than we would with marching. 

jdelano's picture

wonder if it would work if we all got together to bid up or crash a stock....?  Oh wait--forgot, we'd need to get the SEC on the dole first.  Anybody got a good stash of porn vids?

Hansel's picture

"Has anything really changed in the last 24 hours, other than more taxpayer risk/debt via bail-outs?"

There haven't even been more bailouts.  Seriously, what makes today's announcement any different from the announcement on July 21st?  There has only been a promise of a plan for a bailout of some kind in the future with details yet to be announced.

rajc's picture

aren't they printing more money? so isn't the inflation a higher risk now?  and from which we know that hgiher equity prices are likely?

rajc's picture

i agree ZH is pessimissim is now 50-50.  they are right 50% of the time and wrong other 50%.  its like the weather channel.

when they are correct we are like thank god for weather channel and when they are wrong we fucking hate them.  


ZH is nothing but full of nay sayers now and folks with most pessimistic views of all... its so pessimist that ZH reader comments can;t even be used as a contrarian indictor. 

lemonobrien's picture

we like gold, guns, and realism.

UP Forester's picture

.... and unicorns that shit skittles....

Makes the day/night more entertaining....

jdelano's picture

I take umbrage to this.  ZH tells the TRUTH.  The people here are not pessimists, they are merely strong enough to 'handle the truth' (i.e., this system is broken and is going to disburse a lot of pain as it unravels).  It takes a relentless kind of optimisim to be able to face that truth and believe it can be overcome instead of running to immerse themselves in the palliative cocoon offered by the likes of CNBC, BLOOMBERG.  It isn't pessimism, it's disgust with everybody else's desire to be spoon fed lies and  told bedtime stories while the house burns down instead of grabbing a fucking water bucket.  Least, that's how I feel about it.

Village Smithy's picture

What we get here is the truth. How we use it is up to us.  

derek_vineyard's picture

hey dumb fuck danger (pronounced   dang ER <<<lol)

us true Zhers are doing great:   gold, silver, oil, agricutural commodities---preparing for fiat crisis OR inflation crisis---its been a great few years and those Zhers trading equities have only had a portion of their portfolios damaged at all.

But if they are following the core beliefs, they are doing EXTREMELY well overall.

I personally only fear not having much physical, but that is a personal choice due to the risks of theft and logisitcis(food is perishable).  If I could stockpile commodities safely i would be 100% physical.  Cost of wharehousing and gaurding is a bridge I haven't crossed.   I'm betting the world holds together enough for me to cash in on my paper holding of these assets....that is MY TRUE RISK.   In a total collapse I'd probably have these assets siezed....and I don't feel like hiding in the mountains, so I'll risk a total reset buffered with my extensive arms cache.  I might be the siezer of those assets at that point.




Smiddywesson's picture

All in the meantime this bipolar site spouted doom, costing people thousands. How's that working out for you. Must be those record retail shorts, lolz.

I was in cash and refused to play but good for you.  However, you seem awfully cocky about your results.  It could have gone the other way.  You didn't go long in this market without taking on risk, so now that you won, pretending there was no risk now hardly establishes you as the second coming of Bernard Baruch.  We'll see how that works out in the long run.  Your good fortune (gambling) doesn't cost me a single dime.  Sitting in cash costs me nothing.  Your getting wiped out costs me nothing. 

Green for having the balls to establish yourself as an idiot who knows nothing about trading.

tmosley's picture

Feels like hyperinflation is starting.  Suddenly a lot of things that don't normally rise in price are a lot higher.  Some of our custom chemicals DOUBLED in price, and some of our vital but ubiquitous salts are on "long term back order" due to "raw material issues".

GeneMarchbanks's picture

It comes in waves. They start small, then calm, a tidal, then Tsunami. This might be the tidal....

bernorange's picture

Smells like fiat spirit.  /Nirvana

DoChenRollingBearing's picture

@ tmosley

While not hyper yet, I feel the same.

Japan just raised bearing prices 5% (yes, partly due to the Yen).  We are bracing for Korea to do the same.  Good thing the Peruvian Sol is going UP vs. the US$.  LOL...

SheepDog-One's picture

Tell me about it. The reducer I order is up over 100% per gallon since the start of the year.

JohnG's picture

But electrons are free...just ask The Bernank.

Roland99's picture

zee right shoulder, she being formed?

Kreditanstalt's picture

Wrong.  "Investing" is dead.   No one, other than one or two participants at the margins at the opening bell and off-hours, cares about the news, bad or not-so-bad...

There's no other possibility of a ROI other than the markets...it's the only casino open, and the alternative is to do nothing and watch your remaining wealth frittered away, spent or inflated away...plus, there are those big losses of '09 to recover.

We all have to be in the market - somewhere...we are all forced to become short-term speculators now.  Last one I held for EIGHT DAYS and sold.


hambone's picture

Oil up 4% = massive negative feeding through to economy and Brent hasn't gone below $110 barrel (at least in '09 oil prices collapsed providing a "boost")

Interest rates way up = Refi "boom" over, housing prices under further pressure as mortgage rates go up following T action, new construction?..fuggetaboit!!! (at least in '09 interest rates had further to fall and greater "stimulative" room for maneuvering, tax credits for 1st timers, blah blah).

Dollar collapsing = in '09 dollar collapsed (DXY) from 90 to 75...just where we now sit.  A similar move to further prop equities / corporations would see dollar at 65...oyyyyyyyyyyyyyyyyyyyyyyyyy

Perfect, more headwinds for the real economy...just what it needed.  At least in '09 people still had some savings, some credit, some home equity, some UE bene's...this time around, the cupboard is bare...but equities are based on dollar depreciation and little to do w/ economic activity in US.  I guess we'll find out soon enough if the weak dollar really will repatriate or create jobs, exports.

Belarus's picture


Zee Price Stabeeleetee

Every time a politician or central banker talks about the desire for price stability what they really mean is it's not okay for prices to go down materially; they are only allowed to go up materially. Nothing else matters.