While Equity Drinks Kool Aid, CDS Cautions Uncurable STD Problems May Be Coming To Spain

Tyler Durden's picture

A comparison between equity and Subordinated CDS (inverted scale) levels on STD (that would be Spanish mega bank Santander) indicates that while stocks are still balls to the wall in hopium, credit is getting far more concerned about both recovery and viability prospects of the bank which is considered by many as the gateway to a full blown Spanish sovereign funding crisis. Where STD goes, so goes Spain. And the last time we checked, equities were right at the expense of credit... never. Is it time to just say not to STD? The CDS certainly says so.

h/t Capital Context

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hugovanderbubble's picture

5 stars.

Also BBVA is a short till 5.80 Euros per share.

CajaMadrid-Bankia wont obtain finally access granted for IPO because its quoting 0.4x P /BV in grey market.

Tyler look our CDS 5yrs

and our 10yrs Yield...

Highrev's picture

Very bad end of day, and end of week for the IBEX.

Very bad indeed.

I've got it on daily and weekly trend momentum sell signals now. (And it's only 4 sessions away from going on a monthly sell.)

It barely stayed above the critical pivot support that I highlighted in my post last weekend.


Looks like John Noyce has some very bearish stuff to work with this weekend, and hopefully with updated data. ;-)

This is looking increasingly like breakdown material in many major markets. I dare say it's do or die . . .

hugovanderbubble's picture


Im waiting for 9.200-8.800 in ibex.

No Bid's picture

5 stars indeed.  This type of post is fantastic.


"And the last time we checked, equities were right at the expense of credit... never."   <--- Aaa/AAA/AAA

Big Mac's picture

Nice example of credit leading equities. How do things look for US banks say BAC. Don't have access to a Bloomberg terminal or I would answer this question myself.

pendragon's picture

denial - not just a river in egypt

Thomas's picture

The funny part is that we sold a bunch of our dogshit to Santander back in 2008-09. I knew they would eventually be taken out and shot.

Thomas's picture


Delete (fat fingered double post)


TruthInSunshine's picture

If Spain has any STD, the Bernank has ebola-infected crabs down under.

Lionhead's picture

What an appropriate ticker symbol they have! hehehehehehehehehe   Have no fear, dollar swaps will save the day as the Bernank gives them a blow job.

TruthInSunshine's picture

When central banksters go down on a nation, the citizenry ends up swallowing and their sovereignty gets anally raped, as a bonus.

TheTmfreak's picture

Can't a brotha get a reach around?

Lionhead's picture

Yes, the inevitable "cocktail" for us "consumers." If you wonder why the Bernank has quivering lips at his press conferences, wonder no more; to many blow jobs to global bankers. I suggest he starts wearing a bib when he goes on Tee Vee.

FunkyMonkeyBoy's picture

Rubber up if you want to say no to STDs.

slewie the pi-rat's picture

i want antibiotics, anywayZ!  do things start falling off, or what?

nodhannum's picture

Yes, things start falling off.  Things like prices if you are long and oh, your net worth.

ThirdCoastSurfer's picture

Oh hell, given all the drama over Greece and the "Herculian" contingencies to save it, one can only imagine to what lengths they will go to clean the stables of Spain.

gringo28's picture

another example of ZH not looking under the hood and opting instead for shock......here's a hint: the market already values the European components of STD at about .6x BV.

Tyler Durden's picture

Book value based on Mark to Infrared Unicon assets eh? Oh, the market has most certainly said what it thinks of those...

gringo28's picture

Tyler, in all seriousness, if you think the "market" is CDS, then no wonder you remain "anonymous". Let's wager this: by next Friday these same CDS will come down substantially and if they do, you retract your little jibe.

hugovanderbubble's picture


Thanks Tyler

Santander gonna test 6 euros again Yes or yes. Spain is in default and Brazil is a corruption bubble.

steve from virginia's picture

"Book value based on Mark to Infrared Unicon assets eh?"


Ha, ha ha!

No need to stop w/ STD ...

AccreditedEYE's picture

Trader on the STD desk, eh? Maybe you should put that resume out there... BAC is always looking for your kind of talent. I have to agree with the Boss... you think that "market valuation" means anything at this point? I'd unload those STD shares and options if I were you.

gringo28's picture

funny. BAC is a pos without a growth business. i did not say 60 cents was a good deal; i simply stated the obvious, which is that their European exposure is already being discounted by nearly half. Do you even know which assets this CDS quote is based on? Let's assume the whole shit house goes down and they split the bank up, what's it worth when the dust settles? (insert stupid funny joke like 'zero' haha, but the truth is the sum of the parts is worth more than what the equity is valued at today).

AccreditedEYE's picture

The only "asset" STD has going for it is the assumption that it will be supported by the government of Spain. Let's go with your "shit house goes down" scenario. Global banks are becoming much more shrewd in their cannibalism. Agreements will be made based upon ownership at the top of the capital structure and your notion of price to book won't be worth anything as equity gets wiped out. I wouldn't touch the equity OR the subordinated debt with a 10 foot pole w/ an iron condom on the tip of it. If you believe your own story, go buy a couple blocks of the equity and report back to us after the end of the 3rd Q.

jm's picture

while I agree with your "senior secured bank debt is king" statement for various reasons, the idea that Santander equity will be "wiped out" is way off.  While Spain is not even a third of the revenue.


gringo28's picture

holy shit, someone with a brain, finally. ZH *used* to be a place of fairly decent and mildly unbiased opinions but unfortunately has devolved into the Glenn Beck of scare-analysis. kudos Tyler, you've turned into an icon, feared anonymously by scores of sheoples who can't think for themselves any longer.....

AccreditedEYE's picture

I didn't literally mean Spain would be able to save them... I meant Spain would petition to the ECB that STD was vitally important to their GDP and, thus, achieve the TBTF. How do you figure I am way off? If this pig were to get hammered, equity as you know it no longer exists as whichever government/central bank recaps them will get a new piece of private equity. Existing shareholders will be wiped.


To Gringo: Keep clinging to that BV valuation Gringo.... you buy those blocks of equity yesterday? 

Cheeky Bastard's picture

oh well, if the market values it at .6x BV, then ... oh, no wait; the market is full of shit and inneficient. credit was never wrong in the past 2 years, and it's not wrong now, especially on subfin debt. 

carry on.

gringo28's picture

CDS Writer to Cheeky Bastard: Can you bend a little to left now?

jmcadg's picture

Hasn't that already started with a couple of Chinese bailouts recently? Spain is in far deeper than they are prepared to admit.

GeneMarchbanks's picture

Barca won. Nadal is winning @Wimbledon. Who gives a shot about Caja or Santander?

slewie the pi-rat's picture

tyler, apparently

in a scorching backhanded way


The entire country of greece could retire with full benefits with just one of the U.S. auto/bank industry "bailouts". Greece is just a distraction of a bigger problem.

SheepDog-One's picture

Greece media tempest in a tea pot....while cat 5 hurricane bears down on us un-noticed.

slewie the pi-rat's picture

in possibly totally unrelated, OT nooz, the crimex silver stash regained the 100 MM toz level.

but only for a day or 2.  LOL.  DJ Comex Gold And Silver Warehouse Stocks-Jun 23  now 98.6  MM.

any big numbers, so far, in inventory changes, are NOT due to crimex trades, nsince only a few hunny silver contracts have stood for delivery, all month:  DJ Comex Silver Delivery Intentions Breakdown - Jun 23

gold has gone ape-shit, with over 6,000 contracts standing for delivery, the lion's share going to the lioness---blythe@jpmorgue.  who knows what she is up to, the hot little wench?  recovering from getting gored by a longhorn? 

wouldn't it be great if TPTB & the PPT closed this afternoon w/ the DJI @ 12,000, gold @ 1500, and silver @ 35?  plus a few pennies, perhaps.  Robo would write a symphony!

SheepDog-One's picture

Too bad Robo cant claim to be actually involved with any of it himself, being the ZH Howard Cosell that he is, commenting from the sidelines.

OrdellRobbie's picture

Sure, doller strengthning, yields collapsing late in the day..just wait till monday.

OrdellRobbie's picture

Sure, doller strengthning, yields collapsing late in the day..just wait till monday.

ZeroPower's picture

For more $ strength and silver puke-age...

TruthInSunshine's picture

Don't forget - it's a Friday.

Terrible news on Portugal, Spain, Greece, Ireland, Italy and Papua New Guinea will come out after 4:00 pm est, which will be seized upon until 9:45 pm est Sunday Evening, at which time Jon Hilsenrath & Andrew Ross-Sorkin will front page stories on the WSJ and NYT about how a universal and complete bailout package has been agreed upon by every single citizen in every single nation comprising the EU...

...and Papua New Guinea.

lieutenantjohnchard's picture

hd down: check

vz down: check

mo down: check

robottrader losing money yet again: check

robottrader distracting self from failure: check

Zing's picture

Back home, silver is taking it up the butt

Cdad's picture

Of course it is.  Part of Ben Bernanke's planned redistribution of funds, from silver and gold, into shares of Netflix.  

Obviously, you have not been paying attention.


TruthInSunshine's picture

Whisper rumor has Maiden Lane XXXXVII (aka world's most toxic hedge fund) accumulating NFLX, LNKD & Pandora heavily.

Cdad's picture

It must be really great to be a criminal banker when you have the last buyer of all things crap at hand at any given moment.  I have some Thornberg Mortgage shares I'd like to sell, but alas, I have not taken the proper college classes.

Oh well...I guess my day will come when the Fed toxic bubble finally bursts....about next week or so.