Market Snapshot: Dow Jones Soars 400 Points On European Rescue Plan #42

UPDATE: Moody's ITA downgrade took some shine off as EUR drops 60 pips and ES now 13pts off its highs. TSYs are 3-4bps lower in yields. Gold/Silver not moving much on it.
On the basis of old news, more promises, lack of any clarity, and Dexia's dump on the Belgian government, the equity markets staged a 4% rally in the last 45 minutes to end an incredible day. Our assumption is that this was simply the bounce that everyone expected as we seemed to have squeezed shorts into lunch and were limping back lower on AAPL disappointment. Quite clearly, there were a few uncomfortable equity shorts who were squeezed out rapidly and incessantly as the S&P massively outperformed credit as well as the broad basket of risk assets - even TSYs only managed to sell back to earlier day's high yields (as opposed to extending). Gold/Silver rallied (though well off week highs) as the USD dumped back near the week's lows and copper and oil rallied but again no where near as ebullient as stocks. Evidently, the equity move is exuberant at best but these squeezes seem able to maintain longer than anyone expects.



Now read this...sound familiar?

Headlines From 2008: "Zimbabwe Stock ... - We The Sheeplez

Nov 04, 2010

Nov 04, 2010

Headlines From 2008: "Zimbabwe Stock Exchange Soars As Others Crash". Submitted by Tyler Durden on 11/04/2010 08:21 -0500. While markets across the world have been crashing, the Zimbabwe Stock Exchange has ...

Moody's Downgrades Italy From Aa2 To A2, Negative Outlook - Full Text Of Three Notch Downgrade

And here we go again. Ironically, this is nothing. Wait until S&P, which just telegraphed very loudly the next steps earlier, puts France on downgrade review...

FT Causes Massive Short Squeeze With Mother Of All End Of Day Rumors

Here are the key selected sections from the FT story that sent the Dow Jones soaring 400 points from its intraday lows: "Although the details of the plan are still under discussion, officials said EU ministers meeting in Luxembourg had concluded that they had not done enough to convince financial markets that Europe’s banks could withstand the current debt crisis... “There is an increasingly shared view that we need a concerted, co-ordinated approach in Europe while many of the elements are done in the member states,” Olli Rehn, European commissioner for economic affairs, told the Financial Times. “There is a sense of urgency among ministers and we need to move on.” Mr Rehn cautioned that while there was “no formal decision” to begin a Europe-wide effort, co-ordination among EU’s institutions – including the European Central Bank, European Banking Authority and the European Commission – on necessary measures had intensified." So, there is .... nothing definite, just more speculation, more rumors, and more innuendo. But hey, it worked last week with the Liesman rumor. It obviously would work for the FT which has become the End of Day rumor source du jour, first with China bailout rumors (since denied), then with recapitalization rumors (denied), and now with this joke. Pathetic.

Ron Paul on Auditing the Fed

silvergoldsilver at silvergoldsilver - 36 minutes ago

Am I in Disney Land? 

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Dont be fooled...

silvergoldsilver at silvergoldsilver - 49 minutes ago

Today I saw an incredible rally from 3-4, quite opposite of what I saw coming when Ben was talking, but this is how the crooks get their money back within an hour. Dont be fooled. This will all go away after the irrational HFT exuberance fizzles by thursday's MA/trend hits. If you traded the 3-4 session, congrats! You've popped your cheery! Dont worry Lehman did this a few times before it went to zero... 

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Recovery "close to faltering", Fed could act

Eric De Groot at Eric De Groot - 4 hours ago

The Fed will act again. Bernanke appears to be listening to the message of the market. A growing list of negative divergences of key intermarket relationships relative to equity prices, new lows unconfirmed by stock prices, illustrates decaying global economic growth. Copper to Aluminum Ratio: Chicago Fed Economic Activity Index: Bill Gross said it best, recession risk overtaking new normal.... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

(Non) News Of Dexia "Bad Bank" Sends Market Soaring

If anyone had any doubt this market is broken beyond compare and controlled by complete idiots, this should put all doubts to rest. Anyone wondering why stocks are soaring, the reason is that according to non-news, because this was first reported yesterday by the FT, Dexia will park €180 billion in worthless assets in a bad bank. This is beyond ridiculous as Belgium, even in JV with France, will be unable to ringfence and hence fund this amount of capital for the now nationalized bank. It also means that Belgium is about to be downgraded following a long-overdue warning by S&P and Moodys to cut the country. It also means that Belgian CDS will soon trade points up front. It also means that Belgian funding costs will soar. It also means that French CDS will explode tomorrow and that interbank markets in Europe will collapse (even more) once the market realizes that France has just diluted its "bailout dry capital" by rescuing a Belgian bank. And so on. And so on. But for now the ripfest is here. Fade every uptick as this is sheer desperation out of Belgium which pretends it is Switzerland and can do with Dexia what the Swiss did with UBS. Hint: it is not and no, it can't.

Apple.com Down For Many Users

Update: Apple.com appears back up for now. Which is more than we can say about Countrywide Financial.

Guest Post: What This Country Needs Now Is Hope

Millions of middle class citizens in the U.S. sink deeper into despair every day. Day by day hope is being lost that the future for our children will be better than our past. The political, financial, and corporate leaders of our country are intellectually and morally bankrupt. The major Wall Street banks are bankrupt. Social Security is bankrupt. Medicare is bankrupt. The whole damned world is bankrupt. Anyone with an unbiased view of our planet would conclude that we are in unfathomable danger. The list of impending catastrophic issues that will blow up the world for millions in the U.S. and across the globe is virtually endless... When I started to detail the issues facing our country today, I expected to come up with 10 to 20 bullet points of key concerns. As I methodically worked through the categories of challenges facing the American Empire, the total reached 76 bullet points. The facts as presented above paint a picture of impending doom for America. The slogans and vapid “solutions” proposed by political candidates and entrenched Washington politicians do not even scratch the surface of what would need to be done to save this country from economic collapse. Many of these problems took decades to create and are not solvable in a reasonable time frame. With the country still delusion, overleveraged, and underemployed, it seems like the existing economic and social structure will need to be blown up to restore hope in this country.

181 Hedge Funds Not Happy With Lack Of iPhone 5 Announcement

UPDATE: AAPL -5.25%, $354.24 lows - holding at 200DMA!
Everyone was expecting an iPhone 5 to be announced today, and... instead got a 4S. Whether due to infrastructure issues, or forward demand analysis, or merely Apple releasing the 4S today only to announce the 5 in a few weeks, is unclear, but the market is not liking the development, and has now dragged America's largest publicly traded company over 3% lower. The bigger problem, as always has been with this company, is when does a whale holder decide to bail, and be the first defector on the most storied company in recent history. As the second chart below reminds us, everyone is in Apple. With 181 key hedge fund holders (leaving slow money out of it), what are the odds one will pull out?

Guest Post: Yield Spread Confirming Recession Call

Recession.   It is now becoming clearer, even to the mainstream media, that the "Big 'R'" is rapidly approaching, or already upon us.  Without further stimulus from the government the economy will continue its slide into negative growth.  Unfortunately, it doesn't look like the "Calvary" will be charging to the rescue anytime soon.   Bernanke, at this point has effectively punted to the Whitehouse for stimulative action.  The Whitehouse is embroiled in partisan politics which will keep any action from occurring until most likely after the next election.   This leaves the economy and the financial markets to their own devices, and much like kids without parental supervision, they are running amok. I have been very vocal as of late commenting on the fact that a recession is fast approaching.   The trends of the economic numbers have all soured to the negative.   From manufacturing to personal incomes to sentiment they all are signaling a recession lay ahead.   Another confirming indicator of a recessionary track is the spread in yields between junk bonds and high quality bonds.  The chart here shows two different yield spreads.   The blue represents the difference in yields between AAA rated corporate bonds to BB rated bonds while the red represents the spread between 10-yr government treasuries to BB rated bonds.   The dotted horizontal lines represent when these spreads have signaled recessions in the economy.

Five Lessons About The Economy And The Markets From David Rosenberg

Five simple lessons from one of the original skeptics.

Guest Post: Hong Kong - Still The Cheapest Place To Buy Gold Coins

Today in Hong Kong at the Bank of China main branch on Queen’s Road, I bought an ‘unsealed’ Maple Leaf (i.e. loose coin) for just 0.5% over spot; I also purchased a ‘sealed’ Maple Leaf (i.e. collector-ready) for an additional $60, or about 4.5% over spot. Funny thing, it wasn’t even the best price in town. You can buy gold for as low as 0.2% over spot (practically a rounding error) in Hong Kong. Unfortunately, just about every bank was out of stock. This is a special holiday week they call ‘Golden Week’; it’s one of those manufactured holidays that the government uses to encourage domestic consumption. Given the name, a lot of people traditionally scoop up gold bullion… they apparently think it’s lucky to buy gold during Golden Week. Go figure. Needless to say, the banks start running out of stock and the premiums go up; if I had timed my visit a bit better, I could have gotten a better deal. Such is life. Now, let’s be clear about something– I didn’t buy this gold as a speculation. I’m not constantly refreshing my screen so that I can run back down to the bank and make a quick profit. You don’t buy something that’s appreciated 10-years in a row and has increased 7-fold in the same period as a speculation.

S&P Warns "Prospect Of European Double Dip Looking More Likely"

Yesterday, Goldman proclaimed that their new base case outlook is one of a double dip for Germany and France, and hence all of Europe. Now, it is S&P's turn. In a just released report, S&P says that "The prospect that Europe might dip into recession again is looking more likely. The flow of news and market developments in recent weeks, such as sharply deteriorating business sentiment and a projected slowdown in the U.S., has led us to once again revise downward our projections for economic growth in 2012. This follows a number of downside revisions in our last economic outlook at the end of August. We now forecast GDP growth in the eurozone at 1.1% in 2012, compared with 1.5% in our earlier projection. For the U.K., we expect a GDP growth rate at 1.7% in 2012, slightly below our 1.8% projection in August. We still do not expect a genuine double dip to occur in the eurozone as a whole or in the U.K., but we recognize that the probability of another recession in Western Europe has continued to grow. We now estimate the probability of a new recession in Western Europe next year at about 40%. In our baseline forecast, however, we continue to anticipate sluggish and unevenly distributed growth over the coming five quarters." Next up: rating warning for France, and all EFSF bets are off?

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