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European Bank Run Accelerates: EURCHF At Fresh All Time Lows
Impotence defined - 1.3240 is the new EURCHF level at which the Swiss National Bank can only stare, dread and do nothing about. At least the USDCHF has slowed it descent to parity as all of Europe is scrambling to shift its deposits out of local banks and into those of Switzerland. Patience - there are two more days before the LTRO termination, and we may see some real fireworks in the next couple of days as we may witness an unprecedented rush to relocate bank assets. We would not be surprised to see a 1.2x handle in the pair. Elsewhere, there is a true bloodbath in European CDS again, not so much in the usual whipping boy Greece, but Spain, Hungary, and Italy. The shotgunning of risky credits, er, sovereigns has begun. Oh. and remember that "stress test" that was supposed to restore credibility? According to reports Deutsche Bank, Commerzbank, and BayernLB, whose combined assets are likely multiples of Germany's GDP, have passed the stress tests. And nobody gives a rat's ass. Geithner's credibility restoring propaganda plan has now suffered massive failure.
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Domino number 2!
Domino 1 was China number tweak!
Domino number 3?
Guesses?
ORI
http://aadivaahan.wordpress.com
1. European inflation is picking up because of the weak euro and Chinese import is a large part of the index so now because of revaluation of the Yuan and antidumping law being forced in Europe, that number is going to hit 4% to 5% before jan. 2011 which will force America to do something about their deflation through a extra QE. For Europe the inflation is bad because of they are already way behind on their productivity quota's.
2. American unemployment report, and it will be BAD. Also the fact that in the comming months 425.000 temp. govenrment jobs will evaporate won't do any good.
3. European heatwaves are shutting down construction and is affection the industry and the predictions are that the temperatures might mount to 43°C by friday.
4. Fannie and Freddie could need about 1 trillion, and as that math has been done by guys with PHD's, they actually mean 3 to 5 trillion!
Someone please tell me why the Swiss, who appear to hold the strongest economic hand in Europe right now, just voted to push ahead with dismantling their long standing and storied discretionary account banking business - just when there would seem to be a spike in demand for such services.
What's in it for them besides goodwill at this point?
It's not exactly by their own will. Pressure from the states and many european countries forced Switzerland to provide such information to the US government. The repercussions if they didn't vote could be more serious because of all the business they do in IB around the world
All your base are belong to us. I wonder if the Swiss realize it?
Just can't help buying new lows - so I did.
Quite a lot of pixels spilled on the ECB's 1-yr LTRO maturing on Thursday. Funny how no one mention's tomorrow's unlimited 3-month LTRO, or the additional six-day fine-tuning operation with maturity on July 7 (puts you right into the regular 7-day facilities).
Naw, that stuff's not important.
Lots of mentions of it. The smart question is how much gets rolled. Consensus is that if over 300M gets rolled into the new 3-mth facility, that means banks are still fucked.
Of course they are fucked, the question is just whether this week is when it becomes clear to most analysts.
EDIT: seems banks need cash.
http://www.forexlive.com/115937/all/ecb-below-the-mark-in-1-week-term-de...
That's the point. Roll 300M in dodgy collateral into 3-mnth, repo the best 60M on the open market and put the rest into the 6-day facility and your good to go fight another day.
The banks are fucked until they are not fucked. That's the point of this whole charade - let them earn their way out of this, like with the Latin American crisis.
I wouldn't read too much into the liquidity drainer - none of them have been very succesful. Meanwhile, LIBOR/EURIBOR-OIS hasn't really moved since it jumped in late May, suggesting cash needs haven't gotten materially worse over the last month.
I don't get this why would you trust a country whose almost entire gdp
came from banking? surely swiss banks are as much in the sh*t as everyone else?
Unless they think the swiss franc is backed by swiss army knives and cheese and they think thats a good bet?
Not sure I agree. Not yet anyway, this could be a long day.
Spanish govies look very stable though the spread to bunds is higher
http://www.bloomberg.com/apps/quote?ticker=GSPG10YR%3AIND
Credit looks stable too, Greece is allegedly tighter today at time of posting
http://www.cmavision.com/market-data
To be clear the focus today isn't on sovereigns it's on banks. No way would I own Credit Agricole shares or debt right now. To me they look first in line to get completely fucked, (I am short & talking my book).
And yes, any stress tests that dont include haircuts on sovereign debt will be ignored.
of course Geithner's confidence crap failed - euro-based investors are not as moronic as moronic as in the USA... or perhaps $1.5 Trillion from the Fed and strong "encouragement" form the Administration convince GS, C, JPM, BAC, MS and others to temporarily "lift" the market....
As first suggested on June 23, looks like the equity counter trend rally has ended.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
The real market knows that on both sides of the pond the govt. is manipulating the markets in order to make it look like everything is fine. Also here's another thing to consider, how do you get seasoned professionals to part with hundreds of millions and/or billions to buy bonds in your country. These aren't mom and pop stores or jack and jill suburbia sitting on 50,000 dollars to buy a bond. They aren't dumb and know the score, so it's like a conman trying to sell a con to other conmen.