Archive - Sep 25, 2011

thetechnicaltake's picture

Investor Sentiment: Ugly but There is Always Hope





It is ugly but with prices still above support, there is hope.

 

Tyler Durden's picture

Deutsche Bank Charts a Danger Map For A Crisis Prone And Credit Troubled World





Against a background of 30%-plus falls in bank share prices around the world and growing fears of a severe blow to the European bank sector in the event of a sovereign debt default, Deutsche Bank has produced a lengthy tome that answers 'everything you wanted to know about the global banking sector but were afraid to ask'. A compendium of charts and tables, summarized effectively by 'Danger Maps' designed to highlight countries which face greater (or lesser) stresses for their banking systems is further extended into a country-by-country breakdown for developed and emerging markets. While their findings may not line up perfectly with our more global contagion perspective, they do create a systematic framework for judging relative investment opportunities that sees Japan, Australia, Hong Kong, and the Nordics as the least risky; US and UK about average on macro scores; while unsurprisingly (with the exception of Germany) the Eurozone countries have the highest danger scores. Transmission channels are discussed and they make a critical point on bank valuations that earnings estimates are extremely sensitive now to bad debt charges and credit quality assumptions. We then point out their more trading-focused (and negative stance) on European banks citing long-term funding, short-term liquidity, and capitalization as enormous systemic hurdles to anything other than short-term compressions.

 

RickAckerman's picture

Ackerman Takes Fresh Look at Old Foe Lira’s Ideas





With deflation tightening its choke-hold on the global economy, we thought we’d drop in on our supposed nemesis, Gonzalo Lira, to see how he was coping in these very un-hyperinflationary times. 

 

Tyler Durden's picture

Hugh Hendry Makes Rare Media Appearance, Discusses Greece And Other Cheap Folding Suits





The man who singlehandedly took "I would recommend you panic" and made it into one of the catch phrases of the year (if not decade), and who has recently been in a self-imposed media blackout, had a rare media appearance when late last week he appeared on the BBC show The Bottom Line Evan together with Guy Berruyer, chief executive of global business software supplier Sage Group; and internet entrepreneur Brent Hoberman, founder of online interior decoration business mydeco.com. Obviously we were mostly interested in what Hugh would say, and luckily he did say quite a lot, if nothing too shocking for those familiar with his generally cheery outlook on the world.  Among the snazzy soundbites was his explanation that the UK is not in a recession, but a depression, something Zero Hedge has been saying about the entire, never mind England, for the past 2.5 years, and the proceeds to give the rational breakdown of the Greek situation, which as everyone knows is that it is purely due to political power grabbing and banker greed and financial innovation allowing the masking of reality. As for the outcome, we all know it: Greece defaults, creditors take major haircuts, speculators get blamed, etc.

 

Tyler Durden's picture

S&P Reminds Europe Of Its Toxic Catch 22, Warns EFSF Expansion Will Lead To More Sovereign Downgrades, Rendering EFSF Itself Useless





Finally, little by little, the fog of toddler-like euphoria over any and every most recent European bailout plan is starting to lift, this time with the S&P finally speaking up and reminding everyone of what they already know: namely that an expansion of that now-daily deux ex machina, the EFSF, will "potentially trigger credit rating downgrades in the region, a top Standard & Poor's official warned. David Beers, the head of S&P's sovereign rating group, said it is still too soon to know how European policymakers will boost the European Financial Stability Facility, how effective that will be and its possible credit implications....But he said the various alternatives could have "potential credit implications in different ways," including for leading euro zone countries such as France and Germany." Get that? As Zero Hedge said back on July 21, the European bailout Catch 22 is now once again front and center, namely that any expansion in the EFSF will lead to a downgrade in one of the two Eurocore countries, France or Germany, and should France get cut from AAA (which it will), the entire burden of footing the European bailout bill will fall on Germany. And if Germany is also downgraded to AA, kiss your SPV CDO goodbye, and with it Europe. Which means that while we will hear many more threats by both and against S&P, more posturing that the EFSF will be enhanced to tens if not hundreds of trillions with virtually unlimited leverage, however idiotic those may be, the end result is just one: whether or not Germany risks a full blown government collapse by instituting the only thing that has a chance of containing the crisis - EuroBonds. Of course, shoul those come to be, the German Pirate party will very soon have an absolute majority in the German parliament... and shortly thereafter in various previously unheard of beer halls.

 

Tyler Durden's picture

Berlusconi Main Squeeze Merkel Sends Mixed Messages: Says Eurozone Insolvency Is Possible But Greek Default Would Be Comparable To Lehman





In a surprisingly candid yet traditionally schizophrenic interview on ARD 1 show GuntherJauch, Angela Merkel once again sent the same mixed messages that have forced Berlusconi to smile to her face while saying less than flattering things, ahem, behind (no punt intended) her. While on one hand she said that default is an option under the post-2013 Euro rescue fund and emphasized that a euro-area sovereign insolvency can not be ruled out, she also made it clear that Europe continues to have no Plan B. According to Reuters, "allowing Greece to default on its debt now would destroy investor confidence in the euro zone and might spark contagion like that experienced after the bankruptcy of Lehman Brothers in 2008, German Chancellor Angela Merkel said on Sunday." Obviously this is not new, and our humble interpretation is to continue to telegraph to the market how unstable the Eurozone is so there are very little expectations and more EUR short squeezes can be accomplished, as well as not pricing in anticipation that emergency liquidity conduits, currently being implemented, actually succeed in case they actually do. Of course, should Europe really succeed in ejecting Greece without Europe imploding which is the interim end game here that would certainly send the EURUSD to well over 1.50. Alas, we put chances of that happening at about 1%.

 

Bruce Krasting's picture

What's up in Cyprus? War?





Strange series of events in Cyprus.

 

Tyler Durden's picture

EURUSD Quick Recovery From Opening Gap Down Even Though China Refutes Again It Will Bail Out Europe





EURUSD opened down 80pips, to below Friday's lows, but has somewhat rapidly recovered those losses shifting into the green now in very early (and thin) trading. We assume this means the market has still not processed the latest news from China, which officially refutes, for the third time, rumors of an imminent Chinese bailout. From Bloomberg: "It’s “too early” to determine how emerging economies can further help the euro area overcome its sovereign debt crisis because reforms are still under way, China’s Central Bank Governor Zhou Xiaochuan said. “We need to first see if euro-zone countries can implement their July 21 decision,” Zhou told reporters at the International Monetary Fund in Washington on Sept. 24, referring to a pledge by European leaders to expand the powers of a regional rescue fund. He doesn’t expect Greece will default on its debt and anticipates Europe will be able to overcome its crisis through reform, he told reporters." So, first the bank recap rumor refuted, and now the China bailout one... Perfect: it means that the upcoming week will see brand "new" rumors talking about... bank recaps and a Chinese bailout of Europe.

 

Tyler Durden's picture

More Greek Platitudes As IMF Faces Shortfall and Deflects Back to ECB





In speeches by 'Andsome George Papandreou and Evangelos 'Creosote' Venizelos today, the state of Greek, and for that matter global, economic challenges seemed to swing from dire to soluble to dismal within a few small sound-bites. Noting, via Bloomberg, that Greece faces 'huge challenges' and the 'end to the global financial crisis appears more distant', G-Pap admitted (somewhat intriguingly) that there is an urgent need to shield EU members from the crises but was then followed up by his wing-man finance minister who whined that Greece is not the Euro-area's central problem and that the problem of sovereign debt in Euro-area is significant. What was most comforting was Venizelos' expectation that the IMF will extend Greek loan maturities while at the same time BBC News is reporting a growing concern that the IMF will not have enough money to bail out larger European countries if the crisis should spread. It is neither a case of IF or WHEN! It is now, and while this weekend has been marked by a litany of statements, corrections, and re-statements indicating left-hands not knowing what right-hands are doing, we suspect that the simple application of game-theoretical first-mover-advantage is weighing heavy on many politicians (especially Portuguese and German). Just to put one final coffin in the nail of co-operation, IMF's Borges then notes his expectation of the ECB and EFSF as the solution for Europe, once again deflecting, denying, and de-risking?

 

ilene's picture

Twisting in the Wind





Cash remains king into the weekend. I’d love to say BUYBUYBUY but it’s a crap shoot.

 

Tyler Durden's picture

Here Comes FIATtackWatch: Ben "Big Brother" Bernanke Goes Watergate, Prepares To Eavesdrop On Everything Mentioning The Fed





Two weeks ago, the media's heart went aflutter when it learned that the president had borrowed a page right out of ole' Joe McCarthy's communist witch hunt book with the launch of Attack Watch. The response by everyone, even fans of Obama, was immediate and brutal. Yet where Obama took about 24 hours to crash and burn, someone else has stepped in with a far stealthier method of ferreting out the traitors amongst us: none other than our old friends, the Federal Reserve Bank of the United States, which in a Request for Proposals filed to companies that are Fed vendors, is requesting the creation of a "Social Listening Platform" whose function is to "gather data from various social media outlets and news sources." It will "monitor billions of conversations and generate text analytics based on predefined criteria." The Fed's desired product should be able to "determine the sentiment [ED:LOL] of a speaker or writer with respect to some topic or document"... "The solution must be able to gather data from the primary social media platforms – Facebook, Twitter, Blogs, Forums and YouTube. It should also be able to aggregate data from various media outlets such as: CNN, WSJ, Factiva etc." Most importantly, the "Listening Platform" should be able to "Handle crisis situations, Continuously monitor conversations, and Identify and reach out to key bloggers and influencers." Said otherwise, the Fed has just entered the counterespionage era and will be monitoring everything written about it anywhere in the world. After all, why ask others to snitch for you and anger everyone as Obama found out the hard way, when you can pay others to create the supreme FIATtack WatchTM using money you yourself can print in unlimited amounts. And once the Internet is completely "transparent", the Fed will next focus on telephone conversations, and finally will simply bug each and every otherwise "private" location in the world. Because very soon saying that "printing money is treason" will be treason, and such terrorist thoughts must be pre-crimed before they even occur.

 

Tyler Durden's picture

Guest Post: Changing Risk Perceptions Across Multiple Asset Classes





Bottom line this market is very dangerous right now . As witnessed in August when the SPX appeared "oversold" it still managed to sell off another 200 points and take out support levels as if they never existed. The most recent short covering rally has taken away buying pressure and flushed out weak shorts. With leverage still at multi year highs it appears selling pressure remains the bigger risk to equities. Most important though is the diminished threat of the Bernanke put which is analogous to a pick up game between a group of guys on the weekend. The "bears" begin to show an ability to outscore the "bulls" only to see Michael Jordan (the most famous Bull) come in from the sidelines and reverse everything. Perhaps Michael Jordan is sidelined for a while finally or at least limited in his ability to score at will.

 

Tyler Durden's picture

CDS Implied Probability of Default – Be Careful





Unless something changes in the next 24 hours, I expect we will hear more and more talk about default, not only of Greece but of other countries and of banks. Just in case that happens, here is some information that may help you make good decisions. There will be lots of chatter about the “likelihood of default” the CDS market is implying, but although it can be a useful statistic, it can also be very misleading. Before jumping into trades based on erroneous assumptions, it is worth spending a few minutes reading this. If all it does is confuse you, maybe that is a good thing in itself, because you won’t take a headline about default probability as fact.

 

williambanzai7's picture

Up AGainST THe WaLL STReeT





"You measure a democracy by the freedom it gives its dissidents, not the freedom it gives its assimilated conformists."-- Abbie Hoffman [WB7: or Bankster Bailout Queens...]

 

Tyler Durden's picture

Presenting The Org Chart Of The Soon To Be Quite Famous Banque De France





The bank that Napoleon created, and which will very shortly be in every major newspaper's headlines,  certainly believes in the ideology of Keeping It Simple Stupid. Presenting the Banque De Paris Org Chart.

 
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