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Italian Bank Problems Now At The Forefront
The news today continues the rumoring that Italian banks and bonds
are going to see problems this year or early next year. This follows an
interesting email exchange (dated the 8th) that I had with a BoomBustBlog contributor (his comments listed below) concerning our
European bank and soveriegn research from last year.
Of note, please look at the charts from Mish.
Italy has clearly recently broken the 5% support, and if on a tech
point of view, a quick 40bp is guaranteed, to 5.4% (the previous range
was 4.6%-5% so 40bp wide), given the context, and given that German
yields are going DOWN, this is the sign of something much much bigger,
like what happened to Spain and perhaps Portugal. You've seen the info as
well on the recent volatility in Italian banks, and headlines shifting
to Italy, I now believe the big move is happening right now. The
european leaders must be shitting in their pants.
Actually even the spread France vs Germany seems to be going out of its
range, thats a new thing. There can be gaps if a new bond is issued, but
I've noticed a much bigger than usual gap this day, so something is
going on, I've asked a trader as well if something was going on with
french oats, there is definitily a significant move.
And on that note, the following Monday: European Stocks Decline on Italy Debt Concern, China Inflation
European stocks fell for a second day as concern grew that the region’s debt crisis will spread to Italy and China’s inflation surged to a three-year high. Asian shares and U.S. index futures slid.
Intesa Sanpaolo SpA (ISP) retreated as Italy’s second-biggest bank was downgraded at HSBC Holdings Plc.
Page 6 of our proprietary Italian banking research - (
Italian Banking Macro-Fundamental Discussion Note)
reveals what we percieved to be weakness in this bank back in February
of 2010 with an increasing Texas ratio and increasig proportional NPAs.
As for China, well according to
China Is In a Self-Imposed Bubble That Has Nowhere To Go But Bust! You
Don't Get Something (Growth Through Stimulus) For Nothing (No Economic
Consequences)...
Now,
it didn't take a genius to figure out this would happen. As a matter of
fact a slight dose of common sense (when was the last time you got
something for nothing, really?), a little historical perspective or a
BoomBustBlog subscription would have sufficed.
- BoomBustBlog China Focus: Inflation? Thursday, May 20th, 2010
- Can China Control the “Side-Effects” of its Stimulus-Led Growth? Let’s Look at the Facts Wednesday, February 3rd, 2010
- What Are the Odds That China Will Follow 1920’s US and 1980’s Japan? Wednesday, March 10th, 2010
- BoomBustBlog China Focus: Interest Rates Thursday, May 20th, 2010
- My China Ruminations Have Come to Pass As the Country Enters a Bear Market Tuesday, May 11th, 2010
From Bloomberg: China Inflation Accelerates as Loans Surge, Property Prices Rise by Record
May
11 (Bloomberg) — China’s inflation accelerated, bank lending exceeded
estimates and property prices jumped by a record, increasing pressure on
the government to raise interest rates and let the currency appreciate.
Consumer
prices rose 2.8 percent in April from a year earlier, the fastest pace
in 18 months, and property prices jumped 12.8 percent, the statistics
bureau said in statements today. New lending of 774 billion yuan ($113
billion), announced by the central bank, was more than any of 24
economists forecast.
- Chubble
(The Unmistakeable, Yet Thoroughly Argued Chinese Bubble),
Unemployed/Deleveraging Shopaholics Pushing Retail Stocks & Other
News Thursday, April 15th, 2010 - Now That the MSM and Chinese Officials Admit There Is a Bubble In China…Tuesday, July 20th, 2010
- Will the Emerging Markets Lead the World to New Growth? Wednesday, July 7th, 2010,
Excerpts from the HSBC forensic analysis featured in this post:
Below are the full forensic reports available for download to subscribers (click here to subscribe):
HSBC 170610 Professional & Institutional (554.65 kB 2010-07-07 06:23:52)
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