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Time To Load Up On European Equities Puts
By Nic Lenoir of ICAP
We brought up the other day the CAC index as one of the indices we would like to short on a rebound. Being French I can promise you first hand that if there is any form of austerity required as part of the $1Tr package it will not fly one bit by main street and we are likely to see some footage reminiscent of Athens last week. We had riots with a daily car burn rate above 1,200 for over a week because a teenager electrocuted himself trying to escape from the cops, so just try and imagine if railway workers can no longer retire at 50 or 55 after being driven to exhaustion watching a computer do their job 35 hours a week?
Technically we are just below the 200-dma at 3,788, the former support line at 3,810 and the 61.8% retracement at 3,805. Selling between 3,780 and 3,820 would be ideal but with volatility being sold very aggressively it may be worth starting to load up some puts in case we don't get the kiss good-bye retesting of the former supports.
The devil's advocate could look at the IBEX and claim that we retraced 61.8% of the rally since March 2009, and are therefore looking at further acceleration to the upside. Personally last year's 100% rally in the face of insolvency of banks and the government, with unemployment above 20%, and industrial production off more than 25% since 2007, is a bit questionable in the first place. A look at the IBEX on a weekly chart since 1990 shows a very different picture... We think the risk reward to play the downside here is excellent and will only reconsider the recommendation if the CAC closes weekly or at least daily above the 200-dma.
Good luck trading,
Nic
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"We had riots with a daily car burn rate above 1,200 for over a week because a teenager electrocuted himself trying to escape from the cops, so just try and imagine if railway workers can no longer retire at 50 or 55 after being driven to exhaustion watching a computer do their job 35 hours a week?"
I think you can re-paraphrase this for every European country.
LARGE HADRON COLLIDER:
http://williambanzai7.blogspot.com/2010/05/large-hadron-collider.html
"I think you can re-paraphrase this for every European country."
No you can't. To say such a thing is just an example of (American?) ignorance. There are rather huge differences w r t mentalitites within Europe. Look at how Sweden handled its crisis some 20 years ago (overspending á la Greece resulting in huge austerity measures and - contrary to the US Gov. - wiping out equityholders in banks) or how Estonia is working to meet the criteria for entering the EMU (althoug, what good is that now?) Germany is backing off its position due to pressure from the EU and other European countries, not because it wants to. This observation of course only shows why the Euro was flawed in the first place.
Well, I lived in Europe many years and I disagree with you. The difference between Europeans and Americans? Europeans make plenty of noise about the shitty meal and Americans always wind up quietly footing the bill.
"a daily car burn rate above 1,200"
I'd rather know the typical brands greek drive with so I can go long on automobile stocks!
Treasury budget: -82.7 bn vs -40 bn consensus. OOPS
Lada, ...they burn cheaper. Thats where the treasury consensus was wrong for. You (taxpayer) financed the fires.
I guess they'll just have to grow up.
Vive la Révolution Bancaire! I wonder if Fabulous Fab will be marching in solidarity.
Nic Lenoir: just a typical financial market parasite that "works" 12 hours a week and retire at 46, spending the rest of life in a golf club on Bahamas.
Don't be such a negative nancy, thanks.
The french fuc is entitled to her opinion Mr.Kudlow.
Ummmmm, what? What's with the Nic bashing? I'd be inclined to take you seriously if you made substantive arguments rather than empty ad hominem attacks.
OK, you're pissed at Nic. Why? Because he's speaking the truth, and you find the truth to be painful?
World equity puts...Checked.
p.s.
"
May 11 -- The average transaction price of commercial residential properties in Beijing for the week ended May 9 fell 1,790 yuan per square meter or 9.6 percent week-on-week to 16,898 yuan per square meter, reports The Beijing News, citing statistics released by Beijing Real Estate Information Network.
Compared with the week ended April 11, the average transaction price of commercial residential properties in Beijing plunged 31.43 percent to 7,744 yuan per square meter."
Do you Remember as they said the impact of our RE slow down will be hm..minimal?
This s..t will have a ripple effect all the way across the East Asia, give or take 3 -6 months.
Duck & Cover.
http://www.capitalvue.com/home/CE-news/inset/@10063/post/1185337
I find that this was one of the most disturbing pieces of news of the past few days. Utterly devastating to owner and speculators who bought at any time in the last couple of years (read lots). Also utterly frightening to all those speculators in Chinese equities as well, and to a good portion of hot money.
Risk Off! Contagion is spreading like a dose of clap.
Now, if you are a foreign speculator - pension / hedge fund and know that the Chinese gov will stop the capital outflow at will, what would you do?
I would start shitting my...
Welcome to the Roach Motel.
Or load up on DPK if you've got the conviction...
I like options better.
a) you limit your capital exposure. (know your maximum loss)
b) you use higher leverage.
p.s. buying those with the expiration of less than 30 days is almost always a bad idea. Also, if the play works, it's always about not being to greedy and getting out on time.
( DPK: The fund seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price performance of the MSCI EAFE index. )
Big propaganda I suppose.
Wonders if this guy is used to walking on main street. You never know with financial guys.
Usually, riots are well contained. So well that you can walk on large avenues of a big city without ever noticing riots going on in sub urban places.
The riots in France when they happened were largely pictured on world media as racially motivated. Once again, it will be a test for the thesis that a minority who descends from people who were wronged by a majority helps to keep the majority quiet in times of turmoil.
Will stick to this thesis. Time will tell.
As a matter of scale, introducing what happened into Greece as revolutionary context or even large rioting context is fraudulous.
Europe is usually ablazed by football and every week, large police divisions are deployed in order to prevent football supporters not from killing each other but from spreading their violent ways.
Every week, this level of violent is tolerated in Europe.
Until this economic crisis has not bred a superior level of violence, every violence exhibition should be qualified as meaningless. As far as I know, in spite of more harming violence very week, Europe is not depicted as about to collapse through rioting because of football events.
I'd add even more. When you see the number of police force deployed for a football game involved 60,000 people, you might wonder why a government building was so lightly defended during a demonstration of 100,000 people or more.
This summer has all the makings of a long, hot summer of discontent all around. Thailand is escalating as we speak and may descend into chaos. Greece's story is far from over and will incite the other Club Med countries. Spain is ready to boil over. Early stirrings in Ireland yesterday, ongoing in Iceland. UK is ripe. Japan is way underestimated. And then there's the good ole USA: California is a dam ready to bust. In an election year the candidates will find that the quickest road to victory will be to stir up anger. And there'll be plenty to go around.
The common theme will be the rejection of austerity measures being imposed by governments (in league with financiers). Joe and Jane average finding themselves poorer and politically disenfranchised as a consequence of decades of financial folly and corruption. Credit markets will be seriously strained and it's starting to show.
France is a bit different as any sign of trouble every lorry and petro tanker for miles around just parks up for a few days. on all the autoroutes.
the French expertise at civil unrest should not be underestimated.
Insightful observation.
Come to think of it, they always have been masters of making the most noise and contributing the least blood and treasure.
Is this the Wolfpack line?
"Wolfpack" is just a line being used to try and deflect anger to a common outside enemy (old reliable ploy). The real conflicts are coming from within, and France will be joined by all other Euro nations, Germany and UK included, in descending into political turmoil this summer. And as I discussed below you'll see the same happening in the US and possibly in Asia as well.
The beliefs and policies that supported the global financial system are under serious stress and at risk of crumbling. There are no ready or easy solutions at hand. It will have to get hashed out. Each country will have different issues and conflicts. No large country in the world should consider itself immune. The crisis will rekindle old passions and unleash new ones.
Like him or not, Pat Buchanan has written eloquently about the rise of nationalism and the role it has played in so many of the wars of the past 150 years. Whne TSHTF, those nationalistic sentiments will flare up like wildfires (see Belgium, for example). That is why all this diversity crap (we are not Americans, we are XXX-Americans) is, at the end of the day inimical to the best interests of the country and will make the eventukal conflict much more malicious and difficult to resolve.
Correct if I am wrong (will only be rhetorical of course)
But that XXX-Americans was not the end course imposed by the way the Founding Fathers smoked the stick back in the days?
The FF were terrified at the idea of settlers continuation of loyalty to their original nations instead of growing a loyalty to the US states. Therefore to social engineer the US people, a vision of belonging larger than europeans nations' actual belonging sense was developped as the US people was based on the white race concept. While all Europeans shared different loyalties, they were all white.
Of course, positive features are not that efficient without the reinforcement of negative features and using Blacks and Indians as the negative came out. Always productive to a common enemy to unify people, to create that siege mentality "us vs them"
So from the start, there were two types of US Americans, one being used to give reality to the other.
When time came to try to get that US americans kind of stuff, people were faced with integrating a group within a group that was built in opposition to the group to be integrated.
How do you manage that? I am always interested in people touting another possible outcome because I cant see it.
Last point: of course, when the return to the 'roots' was achieved, that supposedly split from Americans to XXX-Americans, the feature the FF feared so much was gone.
African -Americans are as African as I am a Neanderthal. Dutch, French, German -Americans are no longer loyal to their original nation.
In that great US president's words, I would say "Mission accomplished"
In Europe this crisis risks waking up old passions like Sleeping Beauty getting kissed by Prince Charming. Won't take much, the setup is near perfect. There's a risk the center will collapse.
In Asia the issue will be more one of nationalism and old identity versus globalism with Anglo-Americanism as the obvious target. Elites will have to convince the hoi polloi that they will be better off in the long term. In a bad enough crisis there is no long term, though. There's only now.
In the US I predict fragmentation rather than what pundits predict will be a rush toward either of the usual two choices of red or blue. Candidates will find that many old themes no longer play in a genuine atmosphere of economic crisis. Also candidates will discover just how much US demographics (and therefore politics) have changed since the last time they opened the playbook.
It has arrived...global contagion...
I think one of the flaws in creating an economic union is that they let countries determine their worker benefits/retirement. For example, if you have to work 40 hrs/week until 67 in Germany, you automatically have an "arb" situation for the Greek (or other) worker who's working 33 hrs/week until 63. Not even including how productivity varies per capita. And they (non-Germans) got a better interest rate than they would've had they been on their own. If they all really wanted to be in the same boat, all of the work/retirement stuff had to be 'harmonized' (not that I'd want that for myself, but I don't live there). Heck, they don't even have all the same tax rates. It was bound to be a mess of skewed interests.
Looks to be serious desperation to keep Euro above 1.26, everytime it collapses to that level its pumped back up suddenly, must be alot of stops there to send it much lower, and if it breaks down into 1.25 range, panic might set in when intervention cracks.
"The biggest 'all-in' in the history of poker" -Henrik Enderlein
"There are rumours that the right-wingers in [Merkel's] conservative CDU party are plotting a coup against her - rumours strengthened by the visceral distaste for her latest largesse in trying to prop up the common currency."
Now German citizens have also been told that a tax cut is shelved for at least two years, and will probably never materialise in the life of this administration.
http://www.dailymail.co.uk/news/worldnews/article-1277393/Greece-debt-cr...
The hilarious tone of these posts is a great counter point to their tragic content.
If I knew how to post pictures, I would try to exemply the spirit of Zerohedge with that one of the tragi-comic actors masks...
With all due respect, I think that RobotTrader and Leo K. really get to the heart of what this group is all about with their photos.
Am I the only one who read this title as.
Time to load up on European Equity Putzes
And thought to myself. There's no way I'm going to outbid you guys for Harry Wanger.
For a couple billion they could set up those exchange co-located HFT servers and pump up the equity markets.
Is the bailout package a done deal? Or does it have to be ratified? A trillion bucks given to the big banks over there will make its way into the market, no?
Here in Strasbourg you sense something is coming....tax receipts must be well down. No wonder Bruni is telling Sarko to not try for another term, they know quelque merde is coming down the tuyau and don't want to be associated. Strangely, I think France is heading towards a hung parlaiment in a way...with the eco-party green team joining the red team to try and out tag the blue team :)
The solar bubble and feed in tariffs in france are future enrons in the making.
France needs revolutions, it bounces from one extreme to another because most of the time the government keeps the people in a captive bubble. This crisis finally popped the bubble.
Europeans are upset because their formerly super-fat pensions which they draw after 50 or 55 would entitle them to live like royalties in Thailand or Cambodia. Now they see the euro has dropped 20% wrt USD and far more wrt many Asian currencies, and much more to come. All of a sudden, they are shouting "I want my fat cheese back!" Make no mistake, Europe, like America, had 2 decades of reprieve because desperate Asians were willing to slog for US$2 a day producing consumer goods for them. That time is over. les feignants!
Hmm...
You're underestimating the slavish devotion of the European bourgeoisie to the US establishment. I suspect they will deport or exterminate their minority populations (minus the Jews in Germany and elsewhere).
Europe is far more likely to default, relax, and retire. Some of you are trapped in a Cold War mentality in which all nations must compete with one another in terms of GDP.
I like to think of France as sort of like the Dominican Republic. They will fall in line, while the Swiss clink glasses. Perhaps it may be possible to re-civilize them. Maybe not. I may be underestimating the virulence of the Trotsky wing of the young European.
Updated DOW charts showing recent buying support:
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com