Yesterday morning TMM were somewhat relieved to find Spain and Italy the focus of attention as Friday's rip higher had us feeling like passengers that had drunkenly got off the last train home a few stations early, watching it continue on up the track leaving us in the cold with a long walk to catch up. We had been thinking that HY credit was to be the populist trigger for a wobble but we are happy for an assist from any hand.
But Europe? Well as TMM says- "There are two things in life you can be sure of - "Death" and "A peripheral European country tripping over the last step up out of the darkened cellar and smashing its nose on the concrete"". Spain and Italy? TMM thank you. But special thanks has to go to Rajoy for adding a new precedent to political get out clauses with his statement that all the information that has been published by the media "is untrue - except for some things". Bet Chris Huhne wishes he'd thought of that one.
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But thanks also have to go to to the supporting cast of European technicals, a monster stop-loss post NFP towel-chuck, the odd ratings company being gunned down (just when they thought they'd got away over the horizon) and an army of extrapolationists and their straight lines (did you see how many calls to new extremes came out from various research houses over the weekend? NZD/USD parity?).
Overnight falls in Asia have confirmed the globalness of this pullback but the tussel between improving ecomomic data, Spain PMIs very good, and the new euro political news has seen Europe open to a rebound. But TMM think the anatomy of a wash out will naturally see the buy-the-dippers first appear before another down move takes them out too with a collective "urghh". So with that in mind TMM are today sell-the-ralliers thinking this dip has more to it.