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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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Fri, 06/24/2011 - 13:31 | 1398880 hugovanderbubble
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...

Fri, 06/24/2011 - 13:44 | 1399058 Highrev
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.

http://www.zerohedge.com/article/podcasting-charts-matter-next-week-technical-look-european-breakdown#comment-1382661

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 . . .

Fri, 06/24/2011 - 14:03 | 1399119 hugovanderbubble
hugovanderbubble's picture

+1

Im waiting for 9.200-8.800 in ibex.

Fri, 06/24/2011 - 14:15 | 1399195 No Bid
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

Fri, 06/24/2011 - 12:50 | 1398883 Big Mac
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.

Fri, 06/24/2011 - 12:51 | 1398888 pendragon
pendragon's picture

denial - not just a river in egypt

Fri, 06/24/2011 - 13:18 | 1398966 Thomas
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.

Fri, 06/24/2011 - 13:42 | 1398971 Thomas
Thomas's picture

 

Delete (fat fingered double post)

 

Fri, 06/24/2011 - 12:53 | 1398894 TruthInSunshine
TruthInSunshine's picture

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

Fri, 06/24/2011 - 13:03 | 1398919 Lionhead
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.

Fri, 06/24/2011 - 13:08 | 1398922 TruthInSunshine
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.

Fri, 06/24/2011 - 13:19 | 1398954 TheTmfreak
TheTmfreak's picture

Can't a brotha get a reach around?

Fri, 06/24/2011 - 13:19 | 1398969 Lionhead
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.

Sat, 06/25/2011 - 03:24 | 1400726 Nassim
Nassim's picture

Incurable STD's are avoidable http://hivstatus.info/

Sat, 06/25/2011 - 03:24 | 1400727 Nassim
Nassim's picture

Incurable STD's are avoidable http://hivstatus.info/

Fri, 06/24/2011 - 12:53 | 1398895 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Rubber up if you want to say no to STDs.

Fri, 06/24/2011 - 12:54 | 1398901 slewie the pi-rat
slewie the pi-rat's picture

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

Fri, 06/24/2011 - 13:03 | 1398915 nodhannum
nodhannum's picture

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

Fri, 06/24/2011 - 13:01 | 1398908 ThirdCoastSurfer
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.

Fri, 06/24/2011 - 13:00 | 1398921 gringo28
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.

Fri, 06/24/2011 - 13:13 | 1398943 SheepDog-One
SheepDog-One's picture

LOL!

Fri, 06/24/2011 - 13:38 | 1399032 Tyler Durden
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...

Fri, 06/24/2011 - 15:32 | 1399496 gringo28
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.

Fri, 06/24/2011 - 15:45 | 1399521 hugovanderbubble
hugovanderbubble's picture

+1

Thanks Tyler

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

Fri, 06/24/2011 - 19:34 | 1400108 steve from virginia
steve from virginia's picture

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

 

Ha, ha ha!

No need to stop w/ STD ...

Fri, 06/24/2011 - 14:02 | 1399116 AccreditedEYE
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.

Fri, 06/24/2011 - 15:40 | 1399503 gringo28
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).

Fri, 06/24/2011 - 16:41 | 1399688 AccreditedEYE
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.

Fri, 06/24/2011 - 17:41 | 1399844 jm
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.

 

Sat, 06/25/2011 - 17:35 | 1401572 gringo28
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.....

Tue, 06/28/2011 - 20:35 | 1410413 AccreditedEYE
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? 

Fri, 06/24/2011 - 14:38 | 1399313 Cheeky Bastard
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.

Fri, 06/24/2011 - 15:41 | 1399507 gringo28
gringo28's picture

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

Fri, 06/24/2011 - 13:05 | 1398926 jmcadg
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.

Fri, 06/24/2011 - 13:05 | 1398934 GeneMarchbanks
GeneMarchbanks's picture

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

Fri, 06/24/2011 - 13:26 | 1398994 slewie the pi-rat
slewie the pi-rat's picture

tyler, apparently

in a scorching backhanded way

Fri, 06/24/2011 - 13:08 | 1398942 SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

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.

Fri, 06/24/2011 - 13:16 | 1398946 SheepDog-One
SheepDog-One's picture

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

Fri, 06/24/2011 - 13:15 | 1398955 slewie the pi-rat
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!

Fri, 06/24/2011 - 13:21 | 1398963 SheepDog-One
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.

Fri, 06/24/2011 - 13:17 | 1398959 RobotTrader
RobotTrader's picture

Gold 1499?

Fri, 06/24/2011 - 13:24 | 1398977 OrdellRobbie
OrdellRobbie's picture

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

Fri, 06/24/2011 - 13:21 | 1398979 OrdellRobbie
OrdellRobbie's picture

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

Fri, 06/24/2011 - 13:40 | 1399024 ZeroPower
ZeroPower's picture

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

Fri, 06/24/2011 - 13:47 | 1399069 TruthInSunshine
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.

Fri, 06/24/2011 - 13:51 | 1399078 lieutenantjohnchard
lieutenantjohnchard's picture

hd down: check

vz down: check

mo down: check

robottrader losing money yet again: check

robottrader distracting self from failure: check

Fri, 06/24/2011 - 13:17 | 1398960 Zing
Zing's picture

Back home, silver is taking it up the butt

Fri, 06/24/2011 - 13:21 | 1398980 Cdad
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.

 

Fri, 06/24/2011 - 14:22 | 1399217 TruthInSunshine
TruthInSunshine's picture

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

Fri, 06/24/2011 - 14:39 | 1399299 Cdad
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.

 

Fri, 06/24/2011 - 15:29 | 1399475 TruthInSunshine
TruthInSunshine's picture

I just sent an 'offer to sell' the Brooklyn Bridge, via a quit claim deed executed using MERS, to The Bernank, for 3.7 billion dollars worth of gold.

I am anxiously awaiting his response.

Fri, 06/24/2011 - 13:19 | 1398968 Zing
Zing's picture

Back home, silver is taking it up the butt

Fri, 06/24/2011 - 13:38 | 1399018 oogs66
oogs66's picture

as i posted earlier, the stock fade seemed obvious given that the Greek CDS was wider, SOVX was wider, PIIGS bonds were generally wider, and FINS CDS was wider than where Europe closed.  So they had ignored the entire 3pm rally and they, in theory, should have benefited the most.

 

IYR is also relatively calm in the face of another round of CMBX weakness.

 

The bid/offer is too wide for algo's to play, so maybe CDS isn't just smarter, its actually less manipulated.  How ironic would that be?

Fri, 06/24/2011 - 13:55 | 1399080 Cdad
Cdad's picture

REIT leadership continues to weaken.  Lighter volume today...but in this market, one is supposed to follow light volume [because the market is broken and only gives off Kabuki signals].

REITs are still a sell.

Fri, 06/24/2011 - 13:35 | 1399023 omi
omi's picture

It would be more fair to plot several tranches of CDS, is this subordinate tranche of some bond?

Fri, 06/24/2011 - 13:50 | 1399067 oogs66
oogs66's picture

it is 2 tranches of CDS.  one with Senior Unsecured as the Reference Obligation, and with Subordinated debt as the reference entity.

Fri, 06/24/2011 - 13:45 | 1399064 The Axe
The Axe's picture

Kool-Aid is good.....

Fri, 06/24/2011 - 14:29 | 1399272 squexx
squexx's picture

Make friends with Kool Aid, make Kool Aid with friends...................

Fri, 06/24/2011 - 14:03 | 1399129 Saul Sage
Saul Sage's picture

Follower of ZH since nov 10 and recent member. Had to pop my post cherry here though.  Im a young guy who's mostly invested in Au & Ag for all the obvious reasons. Still too noob for trading. I have a nice little nest egg sitting in the vaults of Santander. Should any of this worry me? After reading this my plan is to get my money out within the next year.

Fri, 06/24/2011 - 14:57 | 1399359 mayhem_korner
mayhem_korner's picture

But what does David Villa say about all this?

Fri, 06/24/2011 - 15:17 | 1399440 doomandbloom
doomandbloom's picture

Tyler, Spain is not Portugal!

 

i would like a Tshirt of that..

Sat, 06/25/2011 - 02:24 | 1400699 Mark4124
Mark4124's picture

480bps wide is nothing dude... the banks were trading well over 1000 with points ahead in the financial crisis.

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