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Broker Talk: "Very Large Selling In All European Bonds: Spain, Italy, France"

Tyler Durden's picture





 

Remember when we said March would be the cruellest month for Europe? Looks like someone did, at least on a NPV basis, and is now preparing for the next phase of the European Crisis. According to Newedge, there is very large selling on dealer screens in "all kinds of bonds: Spain, Italy, and France." It seems at least one trader is not waiting around to see what the Irish stress test results indicate, and the expectation is that, as Bloomberg noted earlier, bondholder haircuts will be fast and furious.

Today should be fun.

 


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Thu, 03/31/2011 - 08:48 | Link to Comment 101 years and c...
101 years and counting's picture

"Today should be fun"

Why?  Did someone tie up the PPT and torch the HFT bots at JPM and GS?

Thu, 03/31/2011 - 08:56 | Link to Comment Tulli
Tulli's picture

Meanwhile, the Portuguese minister of finance disclosed today that instead of the previously reported "low" levels, the Portuguese deficit for 2009 was 10% and for 2010 it was 8.6% (compared to the 7% announced a few weeks ago.

http://www.jornaldenegocios.pt/home.php?template=SHOWNEWS_V2&id=476857

We are all to be reassured now that this is the last revision and these will be the final numbers, especially because the ECB is now officially saying that they do not want the Portuguese accounts for 2010 to be audited.

Thu, 03/31/2011 - 09:00 | Link to Comment Quintus
Quintus's picture

I seem to recall a similar series of ever increasing 'Amended' deficit numbers eminating from the Greek FinMin not so long ago.  Yes, we've definitely seen this movie before.

Thu, 03/31/2011 - 09:05 | Link to Comment Tulli
Tulli's picture

Indeed.

Nothing "new" to see here.... move along....all is priced in.

BTFD.

 

Thu, 03/31/2011 - 09:19 | Link to Comment knukles
knukles's picture

Snow, rain, anthropological global sex change, neutron beams, meltdowns, tsunamis, proverbial biblical floods, coming of the third anti-christ, Revelations.
Not errors, merely extenuating circumstances which, BTW have naught to do with the 4 year old information that's being used for the analysis.

Thu, 03/31/2011 - 09:09 | Link to Comment A Man without Q...
A Man without Qualities's picture

And nobody is to mention the word "derivatives"....

Thu, 03/31/2011 - 09:12 | Link to Comment Tulli
Tulli's picture

What, derivatives? Do they matter?

Naaaa, if they are not reported by the "serious media", they are not a real threat, are they?

Stop whining about irrelevances. /sarcasm off

Thu, 03/31/2011 - 09:14 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Would today be the day gold moves up $ 100?

Thu, 03/31/2011 - 10:08 | Link to Comment Crisismode
Crisismode's picture

Not according to the Morgue.

Thu, 03/31/2011 - 08:48 | Link to Comment JohnnieWalker
JohnnieWalker's picture

Equities + bonds takedown in the making.

Thu, 03/31/2011 - 08:49 | Link to Comment DutchTreat
DutchTreat's picture

It's time to shave. Sit still and nothing will happen.

Thu, 03/31/2011 - 08:49 | Link to Comment knukles
knukles's picture

Well hold my monkey!  Europe comes back on screen front and center?  Great Job, Jean Claude!  Mission Accomplished.

All those fucking bonds are gonna mature before the politicians trying to talk thier way out of this mess. 

Thu, 03/31/2011 - 08:48 | Link to Comment Sudden Debt
Sudden Debt's picture

Just for the summer, this commes as a blessing. TOURIST SEASON IS COMMING UP!!

VISIT EUROPE! We'll get you drunk and rob you blind!

Thu, 03/31/2011 - 11:20 | Link to Comment PY-129-20
PY-129-20's picture

If you do not have a government by the end of the year, I'll have to invade your country to get you one asap (other than "Rompuy the Great"). !ARGH

Thu, 03/31/2011 - 08:50 | Link to Comment Malaespina
Malaespina's picture

Euro below $1 by Christmas, I bet my ass on it!

Thu, 03/31/2011 - 08:56 | Link to Comment Max Hunter
Max Hunter's picture

I hope so..  We might want to stop the current uptrend first.. ;)

Thu, 03/31/2011 - 12:29 | Link to Comment falak pema
falak pema's picture

is your ass pure gold or USD based?

Thu, 03/31/2011 - 08:49 | Link to Comment The Axe
The Axe's picture

Question?  What makes the US dollar go up?     NOTHING....

Thu, 03/31/2011 - 08:52 | Link to Comment pendragon
pendragon's picture

spot on. hoenig comments were really hawkish. hopefully lacker goes the same way later

Thu, 03/31/2011 - 09:00 | Link to Comment Zero Govt
Zero Govt's picture

strange but 2 events drives a currency up. First long-term economic strength and second a short term meltdown (see Yen rise as Japan imploded recently)... weird!!

Thu, 03/31/2011 - 09:43 | Link to Comment kaiserhoff
kaiserhoff's picture

And the small fact that even with Bernankenomics, interest rates are unlikely to go negative.  Play the delta, anyone?  The dollar is the least ugly girl at closing time. Sad but true. 

Thu, 03/31/2011 - 09:13 | Link to Comment 101 years and c...
101 years and counting's picture

its not that the USD is going to go "up", its that everything else will just fall faster.

Thu, 03/31/2011 - 08:54 | Link to Comment etrader
etrader's picture

Anglo's USD  swap lines in March

US dollar cross currency swap traded with the NTMA from the

In March 2011 the Bank entered into a cross currency swap with the NTMA on market terms. The principal amounts of the
swap are €2.3bn / $3.2bn and these amounts were exchanged between the parties. The Bank paid the euro nominal amount to
the NTMA in return for the receipt of US dollars. The swap has an amortising profile and contractual maturity of 2021. The
interest rates on the swap are market-based plus an agreed spread. The Bank remains in discussions with the NTMA to
complete a similar cross currency swap for an amount of €645m / £554m. This swap allows the Bank to cover its currency
requirements whilst the NTMA has entered into this trade to cover its currency requirements to cover the repayment of the first
disbursement of IMF lending to Ireland.

 http://www.angloirishbank.com/About-Us/Reports/Annual_Report_Accounts_20...

173 onwards

Thu, 03/31/2011 - 08:56 | Link to Comment Zero Govt
Zero Govt's picture

this European clown show is the mental soften up act for the main event, the US meltdown which will be total farce ...it's all warming up nicely to boiling point!

Thu, 03/31/2011 - 09:14 | Link to Comment JLee2027
JLee2027's picture

Yes, but Euro drops dead first. 

Thu, 03/31/2011 - 08:59 | Link to Comment Careless Whisper
Careless Whisper's picture

Gold. Never. Defaults.

Thu, 03/31/2011 - 09:03 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Gotta Tee up for QE3, so start a crisis... Ben must have put the order out: Make it look real.  LOL

Thu, 03/31/2011 - 09:08 | Link to Comment 99er
Thu, 03/31/2011 - 09:09 | Link to Comment Urban Redneck
Urban Redneck's picture

HELLO QE3...

When the Bernank plays master of the US economy, he stands on a secret wobble board he keeps at the corner of 20th and Constitution Ave.  The board’s axis of movement (monetary policy) are the interest rates and the money supply/strength (inversely correlated).

By one measure the Bernank’s balancing act is actually simpler now- worldwide central bank interest rates, at least those that matter to the Fed (the USDX) are all basically 0%.  As the USDX was invented long before the Asian Tiger and BRIC phenomena, it leaves something to be desired in terms of representing actual dollar strength in a globalized economy, but that is a different discussion.  In the simple world of the USDX, which views the US$ as worldwide reserve currency and official medium of exchange, the €, £, CHF, and krona (Europe) make up 77.3%, the ¥ is 13.6%, and the CAD is 9.1%.

Helicopter Ben’s prescription for drawing the US economy out its comatose depression is to run the printing presses to pump dollars into the economy and jumpstart economic activity and growth.  Without the complexity of varying interest rates, the mechanics are similar to driving a car- the driver pushes the accelerator, more gas goes into the engine, the engine spins faster, the wheels gain traction and propel the car forward.  The driver, however, eventually has to take his foot the gas or downshift, otherwise the engine first redlines, and then melts down.

If you look at the tachometer in Helicopter Ben’s Suicide Machine, the historical redline is about 76 USDX.  Bernank did make an exception during the banking crisis of 2008 and gunned the engine all the way to 71 USDX before letting it drop back to 90.  During QE1 Ben put his foot on the printing press accelerator again and USDX revved from 90 all the way to 79, before he throttled it back.  QE2 throttle is now reading 76, and the economic wheels still don’t have any traction. 

In the past, the Bernank and his predecessors had a group of friends, the Crises, that they would call for push when they got stuck in the mud or snow and didn’t want to burn out the engine on the Suicide Machine.  Right now there is whole gang of Crises milling about- Libya, Bahrain, Egypt, Syria, Iran, Fukushima, PIIGS, but none of them are pushing foreign money (gas) into the US engine, because the US$ is no longer viewed as a safe haven.

Getting a car out the mud can be a dirty, stressful, and time consuming experience, but most people possessing a modicum of common sense can do it.  Even one of the Bernank’s predecessors, Volker, was able to get his car out of a rather large stagflationary mud patch.  But the Bernank lives in an ivory tower, and his mind works differently.  The accelerator must be DEPRESSED, the wheels must rotate FORWARD, and the NEEDLE MUST NOT CROSS THE RED LINE.  In the Bernank’s mind- cracking the dial the USDX tachometer and moving the needle with his finger will solve the problem. 

Someone needs to talk some common sense into the Bernank, or take away his keys, before he blows the engine. 

The USDX tachometer is a strange beast.  It dates to big block 454s and leaded gasoline, but the Bernank Volt Suicide Machine is a complex BRIC-era Government Motors contraption.  However, the older and simpler technology is also easier to manipulate.  All the Bernank has to do is screw up the European economies even worse than the US.  Euro Sovereign Credit downgrades lead to margin hikes then capital base erosion and counter-party phobia, before a full blown credit crisis.  Throw some monkey wrenches in the BMW, Peugeot and Rolls Royce engines so they explode- and the GM Volt looks more appealing to the buyer with money in his hands.  Capital then flows back into the US, relieving pressure on the USDX needle, and Ben can continue to play on his mater of the economy wobble board.          

Thu, 03/31/2011 - 09:30 | Link to Comment Ricky Bobby
Ricky Bobby's picture

+1 Colorful Prose Sir!

Thu, 03/31/2011 - 09:33 | Link to Comment Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

You're all wrong. BB can't and will not do QE3 in the manner you think. He's got other problems and so do you.

 

Think harder.

Thu, 03/31/2011 - 09:47 | Link to Comment taint
taint's picture

Ok, he's going to dump $$$$ in that smoking hole in Japan?

Speak please.

Thu, 03/31/2011 - 11:16 | Link to Comment TwoShortPlanks
TwoShortPlanks's picture

You're right, they're shaking the tree to see who falls first...it's time for someone to go!

See Ya Paddy, hope you like potatoes.......ya fuckin Dick Head!!!

Thu, 03/31/2011 - 12:16 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

@ urban redneck

You write exceptionally well, and your post from a few days ago when you compared the equity and commodity markets to screaming children sitting on top of their parents legs (currency and bond markets) was no exception. In fact, that was one the best metaphors I've ever read in finance/market commentary.  No joke.

I had wanted to write a response to you then, but my reply got nauseously wordy and I didn't feel like I made a worthwhile counter-argument, so I never posted it.  

Anyway, I hope you continue to post.  Your commentary is a joy to read.

 

Thu, 03/31/2011 - 16:07 | Link to Comment Urban Redneck
Urban Redneck's picture

A 666-word metaphor, which aims to explain in relatively simple English the general functioning of the US Central Bank, its activities over the past four years, the current conundrum, the evil Chairsatan’s diabolical solution, and why it won’t work, in about 20 minutes yesterday afternoon after the reminder about Ireland’s STD announcement popped up.  I had to cut some corners to make it work.

 

Incidentally, I agree that there are certain largely ignored underlying supply and demand imbalances which are magnified by speculation.  Given that Cushing is full to the brim, there should be a big swing and larger than usual pot of speculator sucker-money on the table for the taking by practitioners of the black art of actual oil trading on the next contract expiration.       

Thu, 03/31/2011 - 09:18 | Link to Comment Byte Me
Byte Me's picture

And the date tomorrow is........?

Nothing to see here, bye, bye cable.

Thu, 03/31/2011 - 09:32 | Link to Comment Goldenballs
Goldenballs's picture

Time for a stress test for the f****n Gimps at the EU,would not trust any of them to deliver my paper let alone save the continent.

Thu, 03/31/2011 - 09:44 | Link to Comment kaiserhoff
kaiserhoff's picture

Amazing that Europe is leading on this.  Anyone out there old enough to remember free markets?

Thu, 03/31/2011 - 10:08 | Link to Comment HedgeFundLIVE
Thu, 03/31/2011 - 10:13 | Link to Comment M.B. Drapier
M.B. Drapier's picture

Answer unclear, try again later. It's evident from today's Irish Times that Finance Minister Noonan is going to talk about bank senior haircuts today, but it's not clear that he's actually going to give any today, or ever. It may very well just be eyewash for the Irish electorate, or an attempt to pressure the EU into agreeing to the "medium-term liquidity" lending for the Irish banks. Should be good for some excitement in the markets regardless.

Thu, 03/31/2011 - 14:09 | Link to Comment M.B. Drapier
M.B. Drapier's picture

Aaand ... he didn't even talk about it.

Thu, 03/31/2011 - 10:16 | Link to Comment gigeze787
gigeze787's picture

*Serious question*: given the failed EU attempt at PIIGS damage control and imminent implosion of EU debt, why is the still Euro >$1.42...? Is it just central bank manipulation?

Thu, 03/31/2011 - 11:26 | Link to Comment TwoShortPlanks
TwoShortPlanks's picture

IMO, It's stable because they're NOT pumping Euro into Ireland. If Ireland had a chance of pulling through, and they didn't bail it out, the Euro would be under threat and would take a dive...but, since Ireland is un-savable, pumping good Euro after bad would be the wrong thing to do, and that could cause a panic.

Sentiment is shifting from bail-outs being good, to bail-outs being bad.

We're going to start seeing a series of 'Take The Pain' responses from the market. The Fed made a good call on ending QE...until the pain really sets-in.

Thu, 03/31/2011 - 10:38 | Link to Comment mike moll
mike moll's picture

Thank you, Cindy! I believe that you are surely right. Sheep asleep ...

Thu, 03/31/2011 - 11:10 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

BTFD.  That is the only advice I can offer in the face of all of this madness.

Thu, 03/31/2011 - 17:53 | Link to Comment Buck Johnson
Buck Johnson's picture

They sick thing about this game is that the first ones out of the play field get their money, the rest are left with nothing but promises and devalued paper.

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