European Funding Concerns Keep Kneejerk Euphoria In Check

The same robots that accelerated the selloff yesterday, are in charge of the buying this morning, as the mean reversion signals kick in, potentially with a helping hand from the Citadel/FRBNY JV. Yet the "all clear" is nowhere to be found, and in fact confidence continues to evaporate.Today, investors and risk managers have once again shifted their attention across the Atlantic, where the epicenter of this morning's unease is to be found once again in the form of European funding concerns. Exhibit A is the Euribor/OIS spread which at +5.4 bps, and rising, is now at 46.8 bps, the highest since June 2009 (see chart below). Add to this yet another day of unprecedented strength in the Swiss Franc which has now undone all SNB intervention from last week, courtesy of ongoing bank runs across Europe which will be disclosed to the broader public only once it is too late, and we are fairly confident that absent very encouraging language from the Fed, the market's focus will once again shift to Europe and its ridiculously insolvent bad bank, the ECB, at which point the algos will have no chance against yet another onslaught of global selling.