1.The weakness of the last 24h and counting another 24h is caused by a heliocentric event as Venus is square Saturn which is a quick transit afterall. Should be followed by another upside attempt but as I wrote many times before the second half of November especially towards the end of the month will be very ugly anyway as Saturn moves into an exact square to the native Saturn/Venus square of the EURO – meaning the distress- factor on the Euro will reach a climax time window first week of Dec. There will be no real relief as the next big ultimate stress factor will be that the same Saturn will approach exact square the native USA Pluto the following weeks. Not a happy ending for the year as markets will sell off and peoples mood will be gloomy.
The bull camp has just a few days left before the shit hits the … and banks are poised for the sharpest sell offs as the fundamental situation makes it very clear with daily losses on their sovereign bond books. At some point Germany will have to make a crucial decision which can not be revised even it exits the EU which it can not do legally or it allows the ECB to join the self destructive path of the FED and print money around the clock. First option would create an immediate shock and turmoil in the markets and at the fragile state produce a massive crash. The second option easier to accomplish would create a first reaction rally ( bubble extension) for a few weeks before reality kicks in and Gold rises far above 2000 that moneytizing debt is the direct path to hell.
There will be a few good days in between 27th-29th Nov Venus in Trigon to Jupiter but after that own now longs.
In any case – the Navy Seals have their Hell week, wile we are heading for a Hell month and China is not a White Knight although it pretends to be one since they are in big trouble themselves.
UPDATE 1: Chatter that SMP is in BTPs saving the EUR84.50 level again – rest of sovereigns remain weaker.
UPDATE 2: WTI $103
As traders hold their breaths for what will likely be a ‘well-managed’ French auction this morning, the sentiment from the late US markets is spilling into Europe as Sovereigns – especiallyFrance (record wides at 196bps), Italy, and Spain (record wides at 475bps) are all seeing yields and spreads surge. EFSF spread to Bunds just cracked 190bps for the first time as Italian 10Y spreads are back into the record-breaking zone from 11/9 and the Italian 2s10s curve is bear-flattening further by 13bps. ES managed to sustain a low volume recovery off spike lows after hours and is currently +0.5% (though leaking back) as European credit markets open leaking wider with XOver +13bps and Main +4bps. EUR remains under 1.3475 (and EUR-USD swap spread model is reverting back down towards EURUSD) as JPY strengthens modestly. Oil is diverging (higher – breaking $103!) from the rest of the commodity pack and is the main driver of a CONTEXT-based correlated-risk-basket rally (as TSYs drip back towards day low yields levels) that is mildly supportive of ES. Little sign of the ECB yet, but we suspect they are saving their fire-power for pre-auction shenanigans.