October 28 links: Heaven and Hell

Greece 2 Year 5 Year 10 Year
Portugal 2 Year 5 Year 10 Year
Ireland 2 Year 5 Year 10 Year
Spain 2 Year 5 Year 10 Year
Italy 2 Year 5 Year 10 Year
Belgium 2 Year 5 Year 10 Year
France 2 Year 5 Year 10 Year
Germany 2 Year 5 Year 10 Year







David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. So ore down 5.6% on the biggest Risk Awwwwn day for the past three years.

    That’s the very definition of decoupling isn’t it?

    • AUD up to $1.07
      Fortesque up 9%
      Atlas iron up 6%
      Rio up 4.5%

      That all makes perfect sense to me.

    • From the BW piece on Twiggy…

      Iron ore prices had their biggest daily fall since Aug. 20, 2009 on Oct. 25, falling 7.2 percent.

      Fortescue surged 8.9 percent, the biggest gain since May 26, 2010

      Again. Perfect sense.

          • I doubt that Lorax’s prime concern is the ToT although I fully expect him to say it is.

            A reminder that he did recently express a desire for a ‘thumping great recession’ in China indicating ToT not paramount (nor indeed even present) in his thinking!

    • The BurbWatcherMEMBER

      i think this has more and more to do with what govts do and say on the 24-hour news cycle, and less and less about what value is out there – either for the investor or the trader.

      Erratic, knee-jerking psychological reactions (reflected as volatility) reflect a market this high on Ice: they can either dance for hours, refreshed by the next “hit”; or bolt the dance floor when the cops show up to metre-out justice.

      Who can predict a lad on Ice?!

      The market is now the brother you once knew well, now turned erratic Junkie, looking out, hoping for, the next Govt/CB hit.

      Where has you brother gone? Is he lost forever?

      Perhaps – depends how long the dealer keep dealing to him, if you get my drift…

      Rehab sucks, though – will he cry out for more? Will the cops and Daddy give in when he does?

      My 2c

  2. Yep ,no fat-tails just..
    Take another shot of courage
    Wonder why the right words never come
    You just get numb
    It’s another Tequila Sunrise,this old
    world still looks the same…another frame

    Write-on ‘Eagles’….H&H
    Cheers JR

  3. Given the immense bearishness about the USA around here, the 2.5% print is pretty good and well above MB expectations I would have thought.

  4. Adam Carr has declared victory on the US recession:

    Now it wasn’t all just about Europe last night. For much of this year we have had people tell us that the US was at the precipice of recession – the economy had hit stall speed and analysts were dusting off their catchphrases and upgrading their recession calls – 40 per cent or 50 per cent. Indeed, the competition was on to see who could sit on the fence most visibly. Last night’s GDP data shows that the US is nowhere near a recession. The problem of course, and as I’ve been highlighting for well over a year now, is that the sentiment indicators have been at odds with the real, hard data. False signals of weakness have therefore been given. Thankfully, this idea has gained considerable traction of late, and after last night’s GDP, the issue should be put to rest. So third quarter GDP rose 2.5 per cent, which was smack bang on expectations and followed on from a 1.3 per cent rise last quarter.

    Was it just 4 weeks ago the ERCI declared a US recession inescapable?

    • Yep, and obviously chances have diminished. But odds are still decent. Austerity is coming, one way or another. Europe is going into recession and China is flirting with a hard landing,…by year end the US may be the economic out-performer!

      • China is flirting with a hard landing…by year end

        Are you talking about this year? 2 months away. Seriously?

        • I wouldn’t necessarily put those two phrases together, no…but it’s pretty clear now that if China doesn’t ease by year end there will be pain…and by out-performer I mean out-performer relative to expectations…

          • ok. the positioning of the comma threw me.

            China is flirting with a hard landing…by year end, the US

            should be (?)

            China is flirting with a hard landing, …by year end the US

    • And as of a week ago, the ECRI leading index was still falling according to the WSJ.

      Meanwhile check this out:

      Who’s right about recession: Wall Street or ECRI?

      So is the Economic Cycle Research Institute, which emphatically forecast a recession the Friday before the market began its October rally, going to be wrong for the first time in decades? Read more on ECRI’s late-September recession call.

      Or will its managing director, Lakshman Achuthan, who unequivocally stuck his neck out and said recession is ‘’unavoidable,’’ have the last laugh?

      My expectation is that ECRI will be proven right again, and that the stock rally we’re seeing now is a gift — and entirely in line with his forecast — ahead of a renewed collapse.

      Consider that the last two times Achuthan leveraged his cycle research to make an out-of-consensus recession call were March 2001 and March 2008. After the first, the S&P 500 SPX +3.43% rose 14% to its 10-month average in May before falling 32% over the next 16 months. After the second, the S&P 500 rose 9.8% to its 10-month average in May before collapsing by 42% over the next nine months.

      The reason for the lag is that ECRI’s calls come early. That’s why they are called “forecasts” rather than “observations.

      Someone is gonna have egg all over face. Will it be Mad Adam or the ECRI?

      • One of the problems with the ECRI (problems for the rest of us) is that their methods are opaque. It is a proprietary index. So we can only judge them by performance rather than peel away the layers and look at the moving parts.

        Having said that their record is very good which is why people take notice. The leading indicator is looking 6 months ahead so it is possible for it to be falling while things are okay at the moment. That doesn’t mean they will be right but just saying there is no reason why it couldn’t be falling right now despite a good GDP print. Given the magnitude of the print though it takes a bigger fall to head into recession.