Citi Recommends Buying Irish CDS In Advance Of "Nightmare On Kildare Street"

Tyler Durden's picture

Earlier today, JPMorgan made waves by claiming, some would say rather uncouthly, that Portugal's government is about to keel over and die (even if it is undisputed- after all, on Wall Street no one can hear you speak the truth). Never one to be left wanting, here comes Citi with some charts of "parabolic" moves in the Irish 2 Year bond, and some even scarier claims. As expected any research report that starts with the words: "Oh dear...The picture on Irish interest rate markets is taking a very grim turn" - well, it is clear where it is going from there. In summary, Citi now believes that Ireland is essentially done for, or as Tom Fitzpatrick ever so more diplomatically puts it "things are about to get ugly", and recommends going long CDS since the entire short end of the curve has gone parabolic, now that Europe seems set to watch the island country explode, 2s10s has inverted in the past few days, and overall the Emerald Isle is now a dead man walking in the dumbest game of chicken since the creation of the euro. Too bad neither side is willing to back out, which will ultimately end with the eventual destruction of the eurozone and the euro. 

The backdrop per Citi:

Irish bank stress tests are due at th end of this month. The Government is thought to likely have a good idea of the results heading in to the EU summit later this week

Irish bank shares remain under pressure

Increasing talk in press about possible debt “haircuts”

Total opposition in Ireland to compromise on Corporate tax rate.

Total opposition in Europe to compromise on Corporate tax rate

ECB set to raise rates (Repeat of policy mistake of 2008? They raised rates on July 3rd 2008 and EURUSD began a rapid descent 2 weeks later)

80% of Irish mortgages are variable/ECB trackers NAMA has begun to sell assets

This has all the hallmarks of something that might start to get ugly. It is “obvious to a blind man” that Ireland does not have the ability to meet the present requirements (Almost certainly neither on the level of interest rates or level of debt).


In addition Europe does have a track record of “snatching defeat from the jaws of victory” How ironic if having come to an agreement on the ESM (European Stability Mechanism) that taking too hard a line with Ireland, when the cost of supporting them is so small in the overall scheme of things, together with a pre-emptive policy decision by the ECB could derail all that work in the coming weeks.


Given this back drop and given that the set up on EURUSD is similar to that seen in July 2008 (U.S. credit crisis) and again in November 2010- EURO sovereign crisis (16 months later and 16 months prior to today) as per our note of today we have to admit that we are getting increasingly nervous about this back drop.

And the promised scary charts:

The parabolic move in 2 Year bonds, aka the Nightmare on Kildare Street:

Next, the upcoming breakout move in 10 Year bonds:

The bond inversion that just took place:

and lastly, why Irish 5 yr CDS will be the next big trade pre-open tomorrow.

Those who have enjoyed the euros unprecedented spurt to unbelievable heights may soon find themselves reacquainted with reality. Then again, in bizarro world nothing is ever quite what it seems, and if China is indeed the main actor behind the scenes in an attempt to keep the CNY weak relative to the EUR, then all bets are off. 

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ghostfaceinvestah's picture

Better off buying the ultimate protection against all this fiat craziness - gold and silver.

Michael's picture

Just shoot the Euro currency fuck in the head and get it over with.

Default everything. Bring back sovereign currencies. Diversification of currencies is the key to global economic stability. There shall be no single reserve currency status for any nation on the planet period.

The Navigator's picture

But see, that would fuck up their plan for a 1 world currency (proving that individual sovereign currencies are better) under the NWO.

Michael's picture

There are more sinister things going on on this planet than you think.

The world needs to shift it's focus from growth of the balance sheet to maintenance of hard assets. The world has grown enough already in terms of physical assets. The new goal should be getting as close to 0% growth as possible and maintaining the the things we've already built. Dismantling the Federal Reserve Corporation and International Banking Cartel operations needs to be our immediate #1 goal. Seizing their assets for financial terrorism and crimes against humanity need to be dealt with harshly and swiftly. Liquidation of debt must be a priority. Debt must be declared the #1 enemy of the state.

Financial services employees can be re-purposed to cleaning streets and painting dilapidated structures.

The "Set of a New Night', or "New Dusk", or something like that can replace the current Sun Cult  imagery they're using on us today.

Moon Rise images can be used to counter the Sun Cult, make the cultists heads explode, and bring the world back into balance.,or.r_gc.r_pw.&wrapid=tljp1300811323156012&um=1&ie=UTF-8&source=univ&sa=X&ei=S86ITcy-HcTJgQfX9vS_DQ&sqi=2&ved=0CCIQsAQ&biw=1570&bih=671

They call the operation in Libya "Odyssey Dawn".  Did you know they renamed the operation in Iraq back in September operation "New Dawn"?

That "Dawn" word is explained by Jordan Maxwell, very intriguing.

Jordan Maxwell - The Dawn of a New Day (2009) 

Alienated Serf's picture

how does looking at a picture of a moonrise cause physical injury?

Long-John-Silver's picture

You can't eat Euro's

Harlequin001's picture

No, but I hear you can eat lead...

Which will be the other mass byproduct of all this money printing...

GFORCE's picture

This euro rally has always been false. Typical FX volatility rally to fill the coffers of Wall St.

The europeans have kicked the can down the road with hastily arranged bailout after bailout.

Ominous sign that JP Morgan and Citi both had negative calls on the eurozone today.

ghostfaceinvestah's picture

It's a race to the bottom, Bernanke has been winning lately, but if he eases up on QE even for a second the Euros will take advantage and the dollar will surge (relative to that other failed fiat).

Long-John-Silver's picture

It only costs 10 cents to print one.

Ricky Roma's picture

short shamrocks, long guinness.

willien1derland's picture

Slainte' - I will drink to that!

tom a taxpayer's picture


Mr. Murphy: Top o' the morning, Mrs. Clancy.

Mrs. Clancy: Top o' the morning to you Mr Murphy. and where are you rushing to this fine day? You seem upset. Come in now and have a nice cup of tea.

Mr. Murphy: No time for tea, Mrs Clancy. I need to give me banker a stress test.

Mrs. Clancy: Oh really now. Do you know more than all the ex-perps at the ECB and the Irisk government who are running stress tests on the Irisk bank.

Mr. Murphy: Tis true. I don't have the gift of stress test in me blood.  But if you can keep a secret, I'm going to stress test my banker as best I spitting on him.

Mrs. Clancy: Well now, I won't be keeping you. Seeing as your going into town, will you do me a favor.

Mr. Murphy: Sure, Mrs Clancy, anything for the sweetest colleen in the Emerald Isle. 

Mrs. Clancy: Please spit on the banker for me...with one of those big gooey gobs I have seen you cough up when you have a mind to.

Mr. Murphy: Consider it done, Mrs Clancy. And an honor it will be to have your support for the stress test of the banker. I don't have the gift of fancy stress tests but I do have the gift of gob.


FischerBlack's picture

Citi wants to sell you Irish CDS. Plenty of us want to buy them, just not with Citi as a counterparty.

Calvin Jones and the 13th Apostle's picture

Buy the fucking dip!!



(Sorry, I had too)

dearth vader's picture

You could've said STDF, "Sell the dipping fuck", for a change.

Arkadaba's picture

How about a pig roast - mmmm?

Highrev's picture

I'll be damned if those spoiled western brats losing a little money now takes front page while people in Libya are losing their lives (in no small part thanks to those spoiled brats) and a part of Japan is losing its entire existence (while those spoiled brats just look on and say that everything will be alright).

I don't like what I see in the near term future that I think is in store.


JR's picture

Speaking of governments “about to keel over and die,” here comes the next Middle East regime change. 

The details are in today's Democracy Now!’s summary - Jeremy Scahill: As Mass Uprising Threatens the Saleh Regime, a Look at the Covert U.S. War in Yemen ( video link below) :

The crisis in Yemen is growing following high-level defections from the regime of U.S.-backed President Ali Abudullah Saleh. On Monday, a dozen top military leaders announced their pledge to protect the protest movement after 45 people were killed and some 350 were wounded when Yemeni forces opened fire on demonstrators in the capital of Sana’a on Friday—after two months of nationwide demonstrations.

“In recent years, the United States has provided hundreds of millions of dollars in military and security aid to Yemen.

“'The Obama administration has really escalated the covert war inside of Yemen and has dramatically increased the funding to Yemen’s military, particularly its elite counterterrorism unit, which is trained by U.S. Special Operations Forces,' says Democracy Now! correspondent and independent journalist Jeremy Scahill. 'It could get much worse if Ali Abdullah Saleh decides to unleash the U.S.-trained counterterrorist units on his own population.'" [includes rush transcript]

Blues Traveler's picture

Someone needs to quikcly tell Obummer that Japan has lots of muslims

Blues Traveler's picture

Texan and I totally agree with you. Where is our suppport and help of Japan?  The only acceptable answer is that Japan declined because we did such a fabulous job in Haiti.

Rodent Freikorps's picture

Texan, and the Japanese need to work this one out on their own. I remember them subsidizing their chip makers to bankrupt American manufacturers.

Let them make it on their own. Or not.

Harlequin001's picture

I wish them all the best, but I would wish them more if they would do it without printing a truck load of new money...

Sudden Debt's picture

fact is that the 2 yr gets a bigger return then the 10 yr so that means we're like 100% sure they'll default as everybody is dumping like crazy.

And while we look at Ireland, Portugal is next by next week and Spain is about the throw up to.

Time to go short on the euro I would say...

This shit zigzaws constantly!

And in 2 weeks they US will take centerstage again and in 4 weeks the EU again and in 6 weeks the US again and in 8 weeks the EU again and in 10 weeks the US again and in 12 weeks the EU again and in 14 weeks the US again and in 16 weeks the EU again and in 18 weeks the US again and in 20 weeks the EU again and in 22 weeks the US again...............................

Rodent Freikorps's picture

Socialist nations should die. Darwin hates you.

Zero Govt's picture

+1  .....the West is based on 'suicide socialism', or at least our Govts are... but if you're private sector the suicide of Govt is not a problem, it's a solution to the problem ...roll on Darwinism :)

dondonsurvelo's picture

And no one will say that the dollar might rally.

Highrev's picture

Stranger things have happened.

nasdaq99's picture

this is good for the irish economy.  remember iceland and icesave.  they let the banks go down rather than shove the bankd debt down the throats of the taxpayers.  it's a good thing ultimately.


merkle has been talkign out of both sides of her mouth too, so let her & trichet step up & buy the crippled debt.



mynhair's picture

Does Iceland care?

Thought not.


Sharia! Sharia! I just met a girl named Sharia!

The most beautiful sound I ever heard:
Sharia, Sharia, Sharia, Sharia . . .
All the beautiful sounds of the world in a single word . .
Sharia, Sharia, Sharia, Sharia . . .
I've just met a girl named Sharia,
And suddenly that name
Will never be the same
To me.
I've just kissed a girl named Sharia,
And suddenly I've found
How wonderful a sound
Can be!
Say it loud and there's music playing,
Say it soft and it's almost like praying.

I'll never stop saying Sharia!

The most beautiful sound I ever heard.

Rodent Freikorps's picture

Isn't "Sharia" Arabic for "On your knees, Bitch"?

mynhair's picture

close enough, but if it were the Berspanky.....

falak pema's picture

sharia means you gotta share her!

THE DORK OF CORK's picture

For a while there I was thinking there might be a rational grand bargain between us and the continental priests.

A reversal of our corporate tax policey for a complete default on our external private debt obligations.

Then I grew up.

I have been saying for some time that the ECB wants to drop kick us through the BOE goalposts of debt.

I would accept this if we were given a measure of dignity such as the reinstatement of our fishing rights in Irish territorial waters and the like but its not likely especially since we have not a coast guard of sufficient size to guard such a bounty.

We were born to be serfs.

Its as simple as that.

Rodent Freikorps's picture

You are welcome in the US. We do not enforce our borders.

You can stay at my house until you get on your feet.


Rodent Six.

Rodent Freikorps's picture

Your choice. How's England treating ya?

I wasn't even gonna charge you rent. I'm starting to figure out why y'all are in the situation you are.

THE DORK OF CORK's picture

I could live with a Norman Overlord now - those Teutonic Knights are right bastards.

Rodent Freikorps's picture

Yes, they were.

The Free Corps were just average guys who cared.

Enjoy working in the peat bogs. One, more or less, won't matter.

Good luck.

THE DORK OF CORK's picture

The Finns have control of our peat industry on some of the raised bogs now so even that is not a option and the EU prevents us from cutting turf on the mountain blanket bogs................. so ............... its the spuds again.

Hope there won't be a blight this time.............

Rodent Freikorps's picture

The offer is open. Let me know.

I can hook you up with a local Catholic church that will help you with a fake ID.

If we are good with an invasion from Mexico, I can do no less than help the Irish.

THE DORK OF CORK's picture

What makes you think I am a Catholic ?

Rodent Freikorps's picture

Forget I said anything.

Good luck.

The offer is closed.

THE DORK OF CORK's picture

Shit , I always wanted to cross the Rio Grande - it is a mental barrier of sorts for me.

Anyhow the Lee is dangerous now - unpredictable flooding and the like , must must must cross the Rubicon.