Euro VIX Jumps As ECB Pumps
Depending
on whether you look at broad liquid risk markets or narrow manipulated
'repressed' illiquid markets, your take on today's European action
will be different. Equity markets were crushed. Corporate and Financial
credit spreads blew wider. Volatility (Europe's VIX) exploded over 36%.
So far so good? But Italian and Spanish bonds rallied. It seems EUR96
was the line in the sand that the ECB (or their proxy banks) decided
was enough for Spanish 10Y bonds and that was where they were defended
to (though we are suspicious why ECB would step in now after 4 months
absence). There was eventually some notable divergence between
underperforming Spain and outperforming Italy by the close (+40bps on
the week vs +27bps). We suspect that much of the sovereign
outperformance was a combination of Sovereign CDS-Bond basis traders
(buying bonds and buying protection in Spain to lock in that wide
spread) and a replay of the short financial credit, long domestic
sovereign credit trade (as in banks will underperform the sovereign if
things hit the fan/wall). That is the flow that was evident when looked
at across markets. All in all, a terrible end to an awful week and
hopefully we have helped explain why sovereigns outperformed
(technicals) as CDS remain at wides and stocks at lows.
Depending
on whether you look at broad liquid risk markets or narrow manipulated
'repressed' illiquid markets, your take on today's European action
will be different. Equity markets were crushed. Corporate and Financial
credit spreads blew wider. Volatility (Europe's VIX) exploded over 36%.
So far so good? But Italian and Spanish bonds rallied. It seems EUR96
was the line in the sand that the ECB (or their proxy banks) decided
was enough for Spanish 10Y bonds and that was where they were defended
to (though we are suspicious why ECB would step in now after 4 months
absence). There was eventually some notable divergence between
underperforming Spain and outperforming Italy by the close (+40bps on
the week vs +27bps). We suspect that much of the sovereign
outperformance was a combination of Sovereign CDS-Bond basis traders
(buying bonds and buying protection in Spain to lock in that wide
spread) and a replay of the short financial credit, long domestic
sovereign credit trade (as in banks will underperform the sovereign if
things hit the fan/wall). That is the flow that was evident when looked
at across markets. All in all, a terrible end to an awful week and
hopefully we have helped explain why sovereigns outperformed
(technicals) as CDS remain at wides and stocks at lows.Obama Ordered The "Code Stux"
When
Iran's nuclear facilities were publicly crippled in 2011 by what then
was considered a revolutionary computer virus which destroys physical equipment,
many immediately assumed the virus originated in Israel for obvious
reasons. They were wrong. In what can be described as the first
presidentially-mandated and condoned act of cyberwarfare, one circumventing the War Powers Act of course,
the NYT informs us that the order to physically impair Iranian
sovereignty came from none other than the Nobel Peace prize winning
president: Barack Obama.Payroll Postmortem
In
perhaps the under-statement of the year, BofA's Economics group note
that "May's unemployment report was a disappointment" with evidence of a
weather reversal and weakness concentrated in construction, leisure,
and temporary help. Pointing out that "This is the recovery of fits and
starts", BofA believes we are entering a slow patch in the second half
of the year. They do not see this report as sufficient to prompt Fed action in June, but it makes August QE increasingly likely. The weakness in the US data is overlapping with an intensifying crisis in Europe, which means the risk-off trade continues.Spain DefaultSwaps at Record as Bond Risk Increases in Europe
Eric De Groot at Eric De Groot - 6 minutes ago
All signs pointing to official policy action this summer. Headline: Spain
Default Swaps at Record as Bond Risk Increases in Europe The cost of
insuring against a default on Spanish government bonds rose to a record as
the nation’s debt crisis deepened. Credit-default swaps linked to Spain’s
notes climbed nine basis points to 609 at 10:40 a.m. in London, according
to data compiled by...
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content, and more! ]]
QE(N) Will Lift All Asset Boats
Eric De Groot at Eric De Groot - 34 minutes ago
The key to timing short-term trend inflections is volume. Volume at support
and resistance zones, for example climax bottoms and tops as well as gaps,
reveal changes in the force behind the trend. Richard Wyckoff made millions
by recognizing that when price fails to break resistance or support with
force, it inevitably reversed and attempted to break support or resistance
with force. 74.7...
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content, and more! ]]
Mining Shares Continue to Outperform the Broader Equity Markets
Trader Dan at Trader Dan's Market Views - 1 hour ago
The last time we had a THREE CONSECUTIVE WEEKS during which the mining
shares outperformed the broader US equity markets was in late October/early
November of 2011. While the month of May this year has been attrocious
for the S&P 500, it has been an excellent month for the miners. June is
starting out on a good note to say the least as we witness today's strong
upmove in the mining shares.
My interpretation of this event is that today's payrolls number, which was
so horrible that it cannot have any sort of positive spin placed upon it,
has jolted traders into moving more and mor... more »
US economy added 69K jobs in May, fewest in a year
Eric De Groot at Eric De Groot - 2 hours ago
More evidence of what Insight readers already know, the economy is
slowing. Today's weak employment data (see chart and headline) will
increase both political and social pressure for another installment of
QE(n). Chart: Job Creation Histogram (JCH): Net Nonfarm Payrolls
Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average.
Headline: US economy added 69K jobs...
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content, and more! ]]
Gold ETF (GLD) Total Assets WA Stochastic
Eric De Groot at Eric De Groot - 3 hours ago
The third hook in the D-wave decline Gold bulls are frustrated by slow and
elongated setup. Gold bears are frustrated by sluggish downside action.
WA, currently at 9%, remains in statistically oversold territory.
Contrarian traders and investors are waiting for 0% readings for entry.
There been only three 0% WA readings since 2006. Long-term investors are
waiting for a 50%...
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content, and more! ]]
Precious Metals Are Going To Make A Lot Of Money For A Lot Of People In The Next Decade
Admin at Jim Rogers Blog - 5 hours ago
If it goes down, I hope I am smart enough to buy more, and I hope I am
smart enough to buy more silver, because precious metals are going to make
a lot of money for a lot of people in the next decade. - in MoneyNews
*Related: SPDR Gold Trust ETF (GLD), IShares Silver ETF (SLV) *
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*ISM Miss Add To Economic Collapse Woes: 5 ISM Sub-Indices In Contraction Territory
Just in case someone did not get the earlier BLS-doctored message,
the final two economic indicators of the day just printed and were...
drumroll... misses. Because remember: not only the 1%ers but the 99ers
have to be begging Bernanke to print. And so he will: ISM Manufacturing prints at 53.5, down from 54.8, and expectations of 53.8.
Prices Paid plunge by 13.5, but the kicker: 5 out of the ISM's 10 sub
indices are now in contraction territory.. And the cherry on top:
Construction Spending unchanged from an upward revised 0.3 to 0.3,
obviously, missing expectations of a jump to 0.4. Looking forward to the
Tim Geithner Op-Ed: "Welcome to the recession."Bill Gross Channels 1972 Rock
Dow Jones Now Red For 2012
The Dow Jones Industrial Index just joined its Transports cousin in the the red for the year.Gold Explodes, Spam Unchanged
Gold
has jumped over $50 post-NFP, now back over $1600. Maybe, just maybe,
as we have been saying since January 1, 2012 is a carbon copy of 2011,
and the NEW QE is coming now that only central planning can sustain an
epic economic collapse (for a few months at least)?Teleportation To Swiss Safety Pushes Record Negative 2 Year Yield
The
best news of the day is that the world just can't wait to pay off
Swiss government debt by "buying" Swiss government debt with its -30 bps
yields.US Tremor Now Hitting Europe Where Germany Is In Freefall
Europe
was leaking on slower growth expectations and ongoing pain in Spain
but the US NFP print hit it while it was down and stumbled the
already-underperforming German DAX - now down almost 4% on the day.
Interestingly the Italian and Spanish yields and yield spreads are
compressing modestly (doesn't seem at all clear why unless desperation
has brought the rest of LTRO money off the table among Spanish banks -
though Bund relative weakness may explain it - though rumors of ECB buying are out - after 4 months off). Bunds are underperforming notably as 10Y TSY - 10Y Bunds drops 7-8bps from this morning's highs - did another safe-haven just get dissed?Gold's Surge, Stocks Purge, And Treasury Yield Records Emerge
The market was anxious going in to the NFP print but once the dismal data point hit, things deteriorated rapidly.
Pre-NFP ->EUR 1.2322, ES 1292, WTI $84, 10Y 1.51%, 30Y 2.59%, gold $1554
Post-NFP -> EUR -10pips 1.2312, ES -10 1282, WTI -$1.2 $82.8, 10Y -5bps 1.46%, 30Y -7bps 2.52%, gold +$18 $1572
Treasury yields at record lows (10Y well below and 30Y right at Dec08 lows) as Gold pops (QE hope?) but stocks don't for now (reality of QE's inability to really help?). Oil down on global growth markdowns and EUR modestly weaker (choppy but practically unch now) - though looks like its all relative printing expectations now.
NFP Huge Miss At 69,000 On Expectations Of 150,000; Unemployment Rate 8.2%
And we have NEW QE liftoff, just as we predicted yesterday:
"That the ADP would miss today's expectations of 150K is no surprise:
after all as we have been explaining for a while, the only way the Fed
will have a green light to proceed with NEW QE if it so chooses at the
June 19-20 meeting, is if the economic data suddenly turn horrendous.
Which means tomorrow's NFP data is make or break: in fact, as far as
markets are concerned, the worse the better - should a -1,000,000 NFP
print come in, stocks will soar." It may take a little while for
the realization to soak in. The actual number of +69,000 was a massive
miss to both the expectation of 150,000, and the whisper number
100,000, and a drop from the massively revised April 77K, which was
115K before. And that is with a 204,000 addition from
Birth Death. Just a total disaster for Obama who has decided to
sacrifice the perception of an improving economy just so he can give
Bernanke a green light to goose the stock market.Greece Faces Electric Meltdown
Maybe the electrician-in-chief can send them some of those unused Solyndra solar panels?Gear Up!
“Gear up!” That is what I say to you this morning. Open your closet door, drag out the flak jacket from 2009, lace up your boots, unlock your guns, bring out the ammo and get ready to go at it one more time because the placid fields of Verdun, long silent, finds the Germans and the French at it once again and we are all about to be dragged back into it; like it or not. There is quite serious business afoot and, just like in war, the political statements made are nothing more than propaganda to mislead the enemy and the enemy is YOU.Dan Loeb Down 2.6% In May, YTD Profits Cut By 40%
We warned Dan Loeb about those Portugese bonds.Frontrunning: June 1
- Germany shifts, gives Spain more time on deficit (Reuters)
- Europe must prepare an emergency plan (FT)
- EU Spain reveals €100bn capital flight (FT)
- Spain’s Guindos says future of Euro at stake in Spain (Bloomberg)
- ECB, EU officials warn euro’s survival at risk (Reuters)
- China can ‘cope’ if Greece exits Euro, NDRC Researcher says (Bloomberg)
- Japan Warns Against Rising Yen (WSJ)
- Global stocks investors head for exits (FT)
- Hot Copper Shorts Burning Commodity Firms (Caixin)
Global PMI Summary
All we can say is thank god for Hungary and, well, uhhh, Greece (that would be pre XGD Greece of course) in keeping the monthly average somehwat respectable.
Overnight Sentiment: Bath Salty
Just about an hour before the US non-farm payroll number is expected to print, and finally resolve the lingering question whether the Chairman will print in 3 weeks, things in Europe have gone from horrible to zombie. A series of horrendous economic reports out of Europe including record Eurozone unemployment, a confirmation of the final European PMI plunge including the second largest monthly decline on record in UK manufacturing, and various soundbites from Syriza's Tsipras, have pushed the EUR to fresh two year lows, Spanish CDS to new all time wides German 2 Year bonds joining Switzerland in negative terriroty, and finally, Bloomberg, as noted earlier, to be "testing" a placeholder for a post-Euro Drachma. As BBG summarizes: "European markets fall, led by consumer & tech stocks with the German market underperforming. The euro falls against the dollar and German 2-yr yields drop into negative territory. Chinese manufacturing PMI data below expectations, though above the 50 level; European manufacturing PMI in line with expectations, below 50. Euro-zone unemployment met expectations and seems likely Irish voters endorsed the EU fiscal treaty. Commodities fall, led by oil & natural gas. U.S. nonfarm payrolls, unemployment data due later." In summary - all data today fits with Raoul Pal's less than optimistic presentation from yesterday.Today’s Items:
Like squirrels hiding their nuts,
Spaniards are taking their money out of Spanish banks at an accelerating
rate. In the last month alone, over $82 billion dollars worth has
“vaporized” out of the region. Get ready for Capital controls, bank
holidays, and other measures to stem the tide of withdrawals.
One would have thought that the Swiss were
more sensible; however, they have made it abundantly clear that they
will defend the 1.20 floor against the euro no matter what. Officials
in Switzerland are thinking about capital controls and negative interest
rates to achieve this. Of course, all this may be bluster to allow
politicians to buy time to secure their own assets before it falls
apart.
Investors, seeing the crisis of the euro,
believe that U.S. Treasuries are a refuge. To that end, the demand has
allowed the 10 year Treasury yield to fall below 1.58 percent. This,
despite that U.S. jobless claims rising 383,000 in May. It will not be
long before these suckers err… investors find out that they went from
the frying pan directly into the fire with their wealth.
JP Morgan is spinning out the “Special
Investments group” as executives cover-up err… clean up the division
that caused multi-billion dollar trading loss. This group will focus on
basic asset-liability management. Asset-liability? You mean, like the
silver in the SLV that does not exist?
You just can’t make this stuff up folks…
US and European regulators are essentially forcing banks to buy up their
own government’s debt. So, when governments are unable to make the bond
payments, or force haircuts for lenders on those bonds, the banks will
go under.
John Embry believes that many people are
becoming aware that Europe is imploding and there are no solutions.
What is going on right now is a rush to the supposed safe havens like US
Treasuries. With that said, it will not be long before more massive
quantitative easing takes place in the U.S. With the manipulation and
rush into paper assets, gold and silver are at all time lows; thus,
before the sling-shot upside occurs, make preparations and keep
stacking.
Even though this insider claims he was not
religious, he is now praying everyday for himself and the country
because of Obama. In fact, this insider states that Obama is far worse
than his critics believe and that he is a dangerous person. He claims
that Obama takes great pleasure in drones killing people and that hes is
a lazy slob of a president. Of course, Romney – being the flip side of
Obama, is most likely just as bad. In short, the country is in the
crapper and the paper is running low.
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