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European Interbank Lending Market Worst Since August 2009: 3 Month EUR Libor Spikes In Post Stress Test Disappointment
Earlier, we reported the Euribor jumped in response to a stress test than now is perceived as fraud by virtually everyone. We also expected some moderate reconfirmation in the Libor market. Sure enough, the last nail in the coffin of Eurozone credibility came from the 3 month Libor, which spike by 0.2 basis points to 0.82313%, the highest since August 21, 2009. Interbank lending in Europe just give JC Trichet and the rest of the propaganda goon squad the middle finger. All else is smoke and mirrors. And since the overnight index swap (OIS) rate dropped marginally, the LIBOR-OIS spread jumped by 0.538 bps to 26 basis points.
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O.K. O.K. I'm selling Euros.
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I dont know .. my forensics point to an all out attempt to push up the Euro at least for a day or two - I mean one cant let a good opportunity go to waste - there is credibility and decorum that has to be maintained at all costs.
Also SPX 1100 seems to be a key battlezone - looks like the disciples of Elliott have identified this as the end of part i of 2 of big 3 or something - although they always have "alternative counts" - ya know - just in case..
So - it would only be natural to have a rambunctious rally through 1100 convincing enough for all the shorts to - once again - throw in the bit of towel ( or lint) they still have in their possesssion.
We shall see what type of trick 'T-ricochet' pulls out from his_______(intentionally left blank)as a follow-on act as the "show must go on"
" Currency, bond and European equity markets have yawned in response to the much-hyped "stress tests" of European banks ..."
....
" The withdrawal of excess liquidity that followed the central bank's first 442 billion euro, one-year fixed rate lending facility contributed to upward pressure on money-market rates, which still remain below the official 1% benchmark interest rate.
With that in mind, Smith cautioned against reading much into a rise in Euribor -- the three-month euro interbank offered rate, a widely followed euro-zone lending rate -- to 0.889% on Monday, the highest in nearly a year. Euribor tends to follow a trend, he said, and has lately been reflecting expectations for higher overnight rates amid tightening liquidity."
http://www.marketwatch.com/story/money-markets-hold-key-in-wake-of-stres...
I know a little bit about equities and trading but I've been working in the fixed income side of things for 27 years.
I would have to say that Smith is full of it, at least initially. The rate should have responded lower. True, it takes a day or three for the 'liquidity' to reinforce but my thoughts are that there is a real possibility that there are several institutions in a 'real' liquidity crunch. And their brethern don't trust 'em.
Tough world, loan sharking.
And yea, they eat their young, old and anything smaller than them.
Uh .. If the stress tests were positive, shouldn't LIBOR go down? Sounds like everyone and their grandmother is calling bullshit.
The market's not calling bullshit. It is calling for a clearance to procede higher; DOW/S&P/NASDAQ, you are cleared to climb and maintain infinity. Expect further clearance from Ben when the elections are over.
Up 65 and the day has not even yet started BABY!!!!!! Get in or get run over people. You will lose your ass believing all the gloom and doom bullshit on this site.
Just move along folks, nothing to see here.
Greece will be first to go, then Spain, Portugal, Ireland, Italy like dominoes. Greece they have 10.35% 10 Yr Bond. Most Stressful.
Why the European Stress Test is Meaningless
The Main Flaws of the Test
1. Under the most severe scenario, banks were tested on how they would cope with a moderate recession,
not a severe depression. Notice the fact that in Greece, Spain and Ireland we already defiantly in
Depression conditions (Deflation, Unemployment north of 15%, Contracting credit, etc.)
2. Some of the banks dodged full disclosure full disclosure of their foreign debt holdings.
3. The test demanded a Tier 1 capital ratio of 6 percent or above by the end of 2011, an extremely low and
inefficient amount.
4. Government bond losses were only applied to trading books, and not hold-to-maturity bonds, as the test
did not consider there was a risk of any sovereign default.
Why the European Stress Test is Meaningless
Hey, I'm getting killed shorting the Euro -ouch!
Code : 1) If 1100 touched than buy 15.000 ES market. Else go to 2).
2) Repeat 1).
Sell, if ZH declares economy is turning upward. Check headlines for T+365.
Using a moderate recession scenario, just seven (7) of ninety-one (91) banks tested—one in Germany, one in Greece, and five in Spain—in order to meet the minimum threshold of 6% for their core tier 1 capital ratio. However, more than twenty (20) banks had a tier 1 capital ratio between 6% & 7%. Most of the institutions that just barely cleared the bar were Spanish banks, plus a few German and Italian banks. Many would have failed more severe tests.
Certainly not reflected in the EDZ10-EDH11 chain, which continue to trade near record highs, with the discount in the back months diminishiing (EDZ10-EDZ11 at +2SD under the 50 day mean). Premiums on EDH11 calls look pretty juicy if you believe the Euribor spike will filter through to dollar based euro deposits.
What? Did the markets expect the truth or something? That's very bold of them.
So, while is might sound a little callous, save your sentimentality for your prayers. If you want to do some good, you don't need to look much farther than your own family or neighborhood to help someone who needs it. All the overt pronouncements of sentiment are pretty shallow water compared to the people who anonymously wade deep into the cold water to help another person with action instead of empty words scjp certification | security+ certification sun certification | sscp | avaya certification | cisco braindumps | microsoft dumps | braindumps oracle |
Interesting to read all the new responses, thanks for all the current news and updates. Hope to read more very soon.
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