Numerous European Banks And Re/Insurers Identified With Tens Of Billions In Greek Failed Repo Exposure

BNP, Commerzbank, HSBC, SocGen, Natixis, BNP, CA, AXA, ING and Rabobank all identified as banks with massive Greek repo exposure. The next question: will writedowns on these now illiquid and, as the Greek bond market is effectively shut down for a second day running, untradeable positions be taken, or will Europe follow the US in pretending tens of billions in valuation gaps will be filled by Hopium? Also, as bankingnews.gr reports, and as we first highlighted, a variety of French re/insurers are about to get whacked.

Daily Highlights: 5.6.09

• Crude oil little changed after falling to six-week low on stronger dollar
• Nigerian President Umaru Yar'Adua Dies, Aged 58
• Oil spill threatens price for jumbo crab cakes at top-ranked U.S. eateries
• U.S. retailers may report smallest monthly sales increase since November after shutting it because of a leakage on May 2.
• Alcatel-Lucent shares plunge after quarter's loss is double estimates
• BNP Paribas 1Q net rises 47% on fortis assets and lower provision
• BP plans to lower containment dome on to seabed of gulf of Mexico

Senator Jim DeMint: "U.S. Taxpayers Are Helping Finance Greek Bailout"

Finally what we have been saying for weeks is starting to filter through to the broader population and even the politicians... Too bad Americans are too apathetic to even pretend to care that their money is being sued to fund the continued and massively mismarked existence of a few French, German and UK banks. Then again, with American Idol hitting its lowest ratings since 2002, a revolution may just be what the doctor ordered.

Hugh Hendry: The Greek "Bailout" Is Really A Bailout Of French Banks

Yesterday we pointed out that France was a global top three derisker in sovereign CDS as traders have shifted their worries from the periphery to the core. We have long discussed that the reason for this is that France, not Germany, has the greatest exposure to Greece and the PIIGS. Below is an RT clip in which Hugh Hendry confirms just this: according to the Ecclectica head man, a mark to realistic market of Greek debt would wipe out E35 billion in French bank capital, "and it is questionable whether the French banking system would take such a hit." Hendry's solution, as has been the case from the solution, is for Greece to leave the euro, and points out that due to FX inflexibility, there will be no tourists in Greece this year as everything becomes painfully expensive, not in Drachmas but in Euros. We would add that the burning parliament is probably not that much of a tourist draw either. In typical fashion, Hugh dismembers Angela Merkel's hypocrisy: "When the truth becomes unpalatable, what is the truth. Angela Merkel, when we say she is being generous, there is nothing generous about spending taxpayers' money in another country, that is not generosity, that is merely trying to salvage a bankrupt set of political ideology. So to blame the messenger when it's the truth that hurts, I find that inexcusable." Just as Hugh's huge bet against the euro has proven to be a terrific success, we are confident that he will be correct about the end of the EMU quite soon as well. And as the moderator adds "Shame on you, Europe, for needing the IMF to bail you out. Europe is like an African nation." Amen.

Goldman Update On EURUSD - Adding To Shorts With 1.2457 Target Once Support Taken Out

The Eur collapse continues and what has until now be an orderly and persistent move is threatening to become erratic and disorderly ; panic is starting to set in. Today we have the ecb press conference and the market will be focused on every word of Trichet's address. We have seen mainly buying interest this morning as people do the prudent thing and take some profit in case Trichet is able to pull a rabbit out of his hat. But I am at a loss to think what he can really deliver that will assuage the markets growing concerns. I think there is a real likelihood that the market will again be disappointed and the euro will accelerate lower once he stops talking. We may be entering a new more violent phase of the sell off with bigger whips in both directions but with more risk still to the downside. We are sticking with a core short position and will look to add quickly should Trichet offer nothing new or on a bounce back to 1.2860-70 (unless a genuine rabbit is forthcoming) and roll down our stop to 1.30. Technicians have important support at 1.2740 and a close below this level should open a test of last years 1.2457 low.

As Spain Prepares New Debt Issuance, Euro Tumbles, Greek 3 Years Hit 15%, And Portugal CDS Blows Out

Today Spain will test the capital markets with a downsized E2-3 billion 5 year issue (from E4.5 billion) carrying a 3% coupon. The yield on the note is expected to come higher than existing comparable maturities which are trading at 3.3%, thus pricing will likely be in north of 3.5%. At the end of March, Greece managed to raise 5 year bonds at 2.8%: there are no concerns that Greece will be able to repeat that result, much to the negative P&L of all those who bought into the last bond issue. "Spain is firmly in the eye of the storm, and the Spanish treasury cannot allow this sale to fail," said Jose Garcia Zarate at consultancy 4Cast. Yet as we showed yesterday, traders are not so worried about Spain, whom they have pretty much written off now, as the UK, France and Germany. In the meantime, the PIIGS fire is raging: Greek 3 Years just hit 15%, as its CDS trades 30 bps wider since the NY close, now at 877 bps. And the eye of the hurricane is moving west: Portugal CDS hit another high of 456 bps today, implying a 33% chance of a sovereign default. Lastly, the euro is plunging and after hitting an overnight support in the low 1.27 area, has bounced slightly. Spain will need all the help it can get. In the very least, today will be a test whether the recent rumor spread by a prominent nationalized and GGB heavy UK bank, that Spain has requested a E280 billion rescue package, was true or not.

Daily Oil Market Summary: May 5

Oil markets were hammered again on Wednesday, as the selling continued for a second consecutive day in equities and commodities. The US dollar was strong again on Wednesday, and it seems that concerns over euro-zone sovereign debt have plucked the yarn that has unraveled the whole cloth of risk appetite. The DJIA finished with losses of slightly less than 60 points, and it seems that oil and equities are the two taking the real brunt of the risk regurgitation. Gold, silver and platinum prices have been kicked lower these last two days, but buying re-emerged in the precious metals – and in copper – even as oil prices and equities refused to rally.