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Germany Spoils Party After FinMin Says Second Greek Bailout May Need To be Revised

Just hitting Dow Jones, another set of cold hard factual bricks for the bailout rumor brigade. From Germany's FinMin Wolfgang Schaeuble:


It appears the euro is now soaring on expectations of a rumor to refute this latest fact.

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Watch History Being Made As Solyndra Execs Plead The Fifth, Confirm Failure Of Government Stimulus Program

Is this the beginning of the end of Obama, with impeachments and much more to follow? Today's pleading of the 5th amendment by Solyndra execs may be the starting point. Watch the live hearing below.

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Black Friday Arrives: Biggest Weekly Move In 30 Year Bond Since Black Monday

30Y rates move more than three standard deviations this week - the greatest move since Black Monday (1987) - as it drops 55bps - hhmm - stability.

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Endspiel: Fidelity Says "It Is Clear Now That The Fed Cannot Bail Equity Markets Out Any More"

Uh... did a member of the status quo just tell the truth? "It is clear now that the Fed cannot bail equity markets out any more and any interest rate cuts by the ECB may not have much of an impact on markets" Cue panic? 

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CDS Rerack: What Comes After Bloodbath? Bloodbather?

As overnight hopes of global bailouts fade, the reality that the markets are on their own has started to sink in across every asset class but perhaps credit - the life-blood of everything we do economically - is hurting the most. Senior financials are 14bps wider at 317.5bps (record wides), Main is 11bps wider at 209bps, and XOver 36bps wider at 880bps. Yesterday saw sovereign selling focused in the majors but today it has spilled over into everyone else as commodity producers have maintained their relationship with oil and have snapped wider. While SovX is 'only' 11bps wider at 368bps, CEEMEA is 41bps wider at 390bps overtaking SovX for the first time since June back to its more 'normal' position cheap to Western Europe.

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Daily US Opening News And Market Re-Cap: September 23

  • Finance ministers and central bank governors of the G20 countries pledged for a strong and coordinated international response to boost global economic recovery
  • ECB’s Coene said that the central bank may take action as soon as next month if the economic data continues to disappoint. However, he also said that giving EFSF bank license would not be a good idea. Meanwhile, ECB’s Knot said that a Greek default cannot be excluded
  • Kathimerini wrote that several Greek MP’s are resisting a new round of austerity
  • The Head of Finnish Parliament said that the use of new EFSF powers should always require parliament approval
  • Handelsblatt quoted a German economic professor saying that Germany has EUR 5trl of hidden debt, while Deutsche Bank said co.’s write downs on Greek bonds could be higher than the 21% level foreseen in a July agreement

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5 Handle For BAC As GM Now A Teenager, At 50% Of Post IPO High

We can only imagine the frantic calls being place between Omaha and Washington this morning...

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TGI Failure Friday: Oslo Stock Exchange Closed For "Technical Difficulties"

The first of what is likely many. "Due to technical disturbances, Oslo Børs' Equity and  Bonds markets are temporary halted. Members may  delete their orders in this state.  Further information will follow. "

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Orphaned Markets

Story yesterday of "helping" the weakest 16 banks in Europe to recapitalize was met with a strong rally, quickly followed by a sell-off to new lows.  The realization that the EU has gangrene and decided to deal with some warts brought back the fear the the governments are once again behind the curve and just don't get it. Then we rallied into the close because the G-20 would of course save us.  So far, not so much.  A wishy washy statement is just not enough for a market that has come to expect (if not depend) on more.   The BRIC's are supposed to ride to the rescue, but in Brazil, the currency has been getting crushed, Chinese CDS is hitting new wides.  Brazil is busy imposing tariffs on China.  Russia is complaining about Chinese dumping.  Hardly the signs of a co-ordinated effort to rescue the world.   So many people have been asking "What has changed?" in the past couple of days.  "How can we have gone from 1,220 to 1,120?"  The answer, to me is clear, a loss of faith in the ability and willingness of the governments to write checks to support the stock market.  I ask what happened to make stocks futures go from 1,120 on the 12th of September, to 1,210 by that Friday?  That to me is just as legitimate a question.  And the answer is clear - the market still believed that the governments were there to give the market whatever it whined for.  Every pop that week was directly a result of some government or quasi government action or rumor.  That rally occurred with Retail Sales disappointing, surprisingly bad Jobless Claims, weak Empire Manufacturing and Philly Fed. 

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Greece Denies Rumors Of An Orderly Default With 50% Debt Haircut

The onslaught of half fiction, half lies from Greece continues after the Greek government was forced to deny the latest set of truth leaks, in this case that Greece is preparing for an orderly default, which it obviously is: there is no way the country can hope to implement the terms of the July 21 bail out now, especially with a dead silence on the terms of the bond exchange offer which means it has failed miserably. What it is certainly right about is that there is no truth to a debt haircut being just 50%: it will be far more, and the reality is it the haircut severity probably won't have much of an impact - most French and German banks have long since wound down their Greek exposure. The key question is how long before the other PIIGS follow suit. Another important question is whether the orderly default will come before the next IMF capital injections is provided to the country or after, and if it will be too late for an orderly bankruptcy then, and instead we get a disorderly one. From Reuters: "Greece denied on Friday newspaper reports that one option in the debt crisis would be an orderly default with a 50 percent haircut for bondholders. "Greece denies the reports," a senior government official told Reuters on condition of anonymity." And we all know what official denials mean...

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Flight To Safety, Liquidations Resume On Fresh European Stability Concerns

Yesterday's last minute short covering rally has been all but eliminated and then some, on fresh European concerns following a Deutsche Bank report that the agreed writedown of 21% from the July 21 second Greek bailout agreement could be executed, and that instead an orderly default with an up to 50% haircut is being considered. Generally, broad concerns that Greece can and will go bankrupt any minute once again dominate and have undone any favorable market sentiment from yesterday's G20, also known as the Full Tilt Ponzi Group, announcement, which was also followed up by an ECB statement that the central bank would do everything to prevent further contagion. Judging by the risk waterfall this morning, and the liquidations in gold (driven by a vague but ever stronger rumor of a winddown at a GLD-heavy hedge fund that is now down 50% YTD), virtually nobody believes anything coming out of any European institution. Alas, this is what two years of relentless accrued lying will do to your reputation. Adding fuel to the fire is a report from Credit Suisse that the chance of a "general European break up" is about 10% and that European banks would fall by about 40% on a disorderly Euro breakup and that peripheral European banks' net foreign liabilities would rise by €800 billion. In other words, European banks would blow up, which is nothing really new. Next, we hear from Dexia which yesterday got annihilated and today is down another 2.5% despite promises from the Belgian central bank governor Luc Coene that the bank is not in trouble and has not sought dollars from the ECB in a long time: obviously an attempt to prevent an all out attack on the insolvent bank, which as is well known bypasses the ECB and goes straight to the Fed for emergency funding. Overall, there is a very distinct sense that it's the end of the world as we know it, and the market does not feel all that fine anymore.

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China, Japan Tell Europe: "No Blank Check For You"

Remember all those daily rumors (prmarily courtesy of the FT) that either China, or Japan, or Europe itself would bailout Europe (yeah, don't ask). Well we can put them all to rest...for at least a few more hours. Because in the battle of inverse counter disinformation, it is important to refute the rumors you yourself have created just so next time the same rumor is spread it has some impact.... Unfortunately said impact will be less, much less, with every single iteration, until just like central bank intervention, its impact is lost in the noise. Per Businessweek: "Officials from China and Japan, the world’s second- and third-biggest economies, indicated that their support for Europe will have limits  and the region needs to solve its own debt crisis. Japanese Finance Jun Azumi said in Washington today that while his nation can buy European Financial Stability Facility bonds if needed, there is no blank check. “At the margin we can do quite a bit to help,” Chinese central bank Deputy Governor Yi Gang said in a panel discussion yesterday at the International Monetary Fund in the same city. At the same time, “the real solution of the European sovereign debt crisis has to be done by Europeans themselves." Good luck in that whole Europeans coming up with a solution: after all it was mere hours ago that France’s Baroin said that the Eurozone is "open to support from others." Translation: "Show us the money." In other news, the countdown for the latest European bailout rumors from the FT is now on.

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Goldman Capitulates On Long EURUSD Call

Just when it seemed that Goldman's all time unbest sell side analyst, FX "guru" Thomas Stolper, may actually have a strike at bat with his long suffereing EURUSD call which has had a worse Sharpe ratio than even John Paulson's hedge fund over the past 12 months, we are sad to inform our readers that Stolper is and continues to be the perfect contrarian signal (pari passu with that other all time fade: Barton "Notorious" Biggs) with a 0.000 statistical average (which, as everyone knows, is just as valuable as a 1.000). Because just as we predicted earlier today, when we said that "Goldman is about to announce it was just stopped out on its 1.55 EURUSD "tactical" trade", Goldman has just announced that it was "Stopped out of long EUR/$." Something tells us the slow money will not be happy to read this when they roll into the office between 10 am and 1 pm tomorrow.

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G-20 Pledges Strong, Coordinated (Sisyphean) Response To Global Challenges [UPDATED With Full Text]

Ironically, French minister Baroin says that the G-20 will release a statement in response to sovereign debt risk (after dinner of course). Isn't it nice when we all get along? Well the response by the markets has been absolutely lackluster so far with after-hours gains being held but not accelerating.

UPDATED with full text of statement

Via Bloomberg:







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