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AVFMS's picture

21 Nov 2012 – “ Rise To The Occasion” (Climie Fisher, 1987)





Greece? Sorry, what’s with Greece? French downgrade. Unexpected, but then again not that much. So what? Fiscal Cliff? As no one speaks about it, it can be ignored. Risk? If it doesn’t fall, it has to rise.

"Rise To The Occasion" (Bunds 1,43% +2; Spain 5,7% -9; Stoxx 2518 +0,4%; EUR 1,282 +10)

 
Tyler Durden's picture

Frontrunning: November 20





  • More QE could distort rather than deliver (FT)
  • Soros Buying Gold as Record Prices Seen on Stimulus (BBG)
  • EU Leaders Face Greek Aid Gap in Brinkmanship With IMF (BBG)
  • Weak data point to bigger economic drag from Sandy (Reuters)
  • Shirakawa Pushes Back With Criticism of Abe Unlimited Easing (BBG) But... but... Bernanke??
  • French Downgrade Widens Gulf With Germany as Talks Loom (BBG)
  • Japanese Poll Shows LDP Advantage Ahead of Election (WSJ)
  • BOJ in the Balance as Next Government Picks Top Posts (BBG)
  • Exchanges Get Closer Inspection (WSJ)
  • Greece edges closer to €44bn bailout (FT)
  • Japan Government to Spend 1 Trillion Yen on Next Stimulus (BBG)
  • China’s Richest Woman Divorces Husband, Fortune Declines (BBG)
 
Tyler Durden's picture

One Less In The AAA Club: Moody's Downgrades FrAAnce From AAA To Aa1 - Full Text





After hours shots fired, with Moody's hitting the long overdue one notch gong on France:

  • MOODY'S DOWNGRADES FRANCE'S GOVT BOND RATING TO Aa1 FROM Aaa
  • FRANCE MAINTAINS NEGATIVE OUTLOOK BY MOODY'S

Euro tumbling. In other news, UK: AAA/Aaa; France: AA+/Aa1... Let the flame wars begin

 
Tyler Durden's picture

Daily US Opening News And Market Re-Cap: November 12





Another day another sell-off…with equity markets in Europe trending steadily lower after it was reported that the decision on Greek aid will not be taken during the Eurogroup meeting scheduled for November 12. Still, EU official said that there will be no Greek default on November 16th (EUR 4.1bln redemptions) and that this redemption is to be "factored in" decision on disbursement. Separately,  analysts at Fitch rating agency noted that while current Spain’s rating is appropriate, further action would more likely than not be to sub-investment grade. Moody’s also commented on the never-ending sovereign debt crisis today, stating that actions taken by the ECB only buying time for Euro region and that a decision on France will be communicated within a few weeks. As a result, bond and credit spreads widen further today, with SP/GE 10s spread at 450 level, which is of particular importance given that this is the level at which the LCH begins to review bonds for margin requirements. Deterioration in Italian paper was linked to next week’s supply. In turn, EUR/USD and GBP/USD trended lower, with the USD index up 0.12% at last check. Going forward, market participants will get to digest the release of the latest U. Michigan Survey (Nov P), as well as macro forecasts from Philadelphia Fed.

 
Tyler Durden's picture

Daily US Opening News And Market Re-Cap: November 9





Another day another sell-off…with equity markets in Europe trending steadily lower after it was reported that the decision on Greek aid will not be taken during the Eurogroup meeting scheduled for November 12. Still, EU official said that there will be no Greek default on November 16th (EUR 4.1bln redemptions) and that this redemption is to be "factored in" decision on disbursement. Separately, analysts at Fitch rating agency noted that while current Spain’s rating is appropriate, further action would more likely than not be to sub-investment grade. Moody’s also commented on the never-ending sovereign debt crisis today, stating that actions taken by the ECB only buying time for Euro region and that a decision on France will be communicated within a few weeks. As a result, bond and credit spreads widen further today, with SP/GE 10s spread at 450 level, which is of particular importance given that this is the level at which the LCH begins to review bonds for margin requirements. Deterioration in Italian paper was linked to next week’s supply. In turn, EUR/USD and GBP/USD trended lower, with the USD index up 0.12% at last check. Going forward, market participants will get to digest the release of the latest U. Michigan Survey (Nov P), as well as macro forecasts from Philadelphia Fed.

 
Tyler Durden's picture

Meet The French Major Whose Spanish "A" Rating Keeps The ECB €17 Billion Margin Call Away





Egan Jones may be a registered NRSRO, but that doesn't matter to the global status quo perpetuation syndicate ("SQPS" or "the syndicate"). Why? Because the small rating agency misplaced a comma when it was filing its NRSRO application with the SEC and has infuriated the same clueless and corrupt SEC, which 2 years after the flash crash still allows the high freqs to make a total mockery of the market (as seen here). Another reason: it recently downgraded Spain to a CC rating, the lowest and thus most accurate of all rating agencies, with a C rating projected, which means if its rating were to be taken into account by the ECB, the result would be massive margin calls amount to 10% or higher of all the Spanish bonds repoed at the ECB. Instead, the SQPS is delighted to have Canadian-based DBRS on its side. Why? Because the tiny firm's A-rating obviates all others' sub-A ratings, this includes Moodys, S&P and Fitch, at least in the eyes of the ECB and thus Mario Draghi has an alibi to not demand an additional €17 billion collateral call from Spain, which would send its banking system on full tilt (this is money neither Spain, nor its banks has to spare). Which is why we wish to present to our readers the man behind the Spanish A-rated myth: Fergus McCormick (Reed College; BA, with honors, French), formerly of Spanish bank BBVA (surely BBVA is not calling in any favors from its former employee currently head of sovereign ratings at DBRS; none at all).

 
Tyler Durden's picture

How Canada Became Spain's Best Friend; Or Why The ECB Does Not Need To Haircut Toxic Spanish Bonds





As reported over the weekend, the German press did some work and discovered that despite Spain being rated practically junk across the board, its bonds pledged as collateral with the ECB had virtually no haircuts, despite as we said back in April, them needing to be haircut by a solid 5% or more an amount which would force the Spanish banko-sovereign system to scramble to procure the critical €17 billion margin call. Well, moments ago the Bank of Spain (not the ECB) came out and said that the ECB had applied collateral rules correctly. However, by that they meant not that the ECB had demanded the needed 5% haircut due upon a downgrade into sub A-range, but that the rating agency which absolutely nobody has every heard of, Canadian DBRS, has a "rating that needs to be taken into account." In other words, Spain's collateral call is now dependent not so much on Moody's downgrading the country to junk, which likely will happen soon if Rajoy does not demand the bailout which has been priced in for about 3 months now, but on what a tiny Canadian ratings firm, which has most certainly not gotten any quid pro quo from Europe to keep Spain at is A-low level (for long-term debt, not so much short-term) says is the Spanish rating quality.

 
Tyler Durden's picture

The 512 Permutating Paths To The White House





Tired of pundits with black boxes and book deals telling you the election is a done deal because some statistically-sampling, biased, Garbage In, Garbage Out model "said so" (remember when the same GIGO logic made every structured piece of toxic RMBS toxic be rated AAA simply because the rating agency models couldn't account for the improbable case of real estate prices actually going down?) Then decide for yourselves. With 48 hours left until polls close, below are the 512 permutating paths available to the two candidates on their way to the White House throne (assuming the other states vote the way they are "expected"). And with the election having crossed far beyond mere theatrical tragicomedy and now well into NCAA finals knock out fever, one can see why Florida and Ohio are really all the matter.

 
Tyler Durden's picture

Spanish Banks May Face €17 Billion Margin Call As ECB Found To Lie About Collateral Haircuts





Mario Draghi has reassured the world that no matter how much 'crap' collateral is taken on to the ECB's balance sheet, their risk management process is rigorous and ensures the safety of the entity's capital thanks to well-devised haircuts and collateral. Once again, it appears from a report in Die Welt (via Bloomberg), Draghi lied, as the ECB is now checking terms on some lending to Spanish banks that may have already contravened the ECB's mandate allowing overly generous terms to be offered on the Spanish banks' collateral. As Bloomberg notes, the issue surrounds EUR80bn relatively short-dated T-Bills which were wrongly classified as rated 'A' instead of the 'B' that agencies - except DBRS! - had assigned (a vast difference) - which would imply (if the ECB re-assigns the correct rating) the affected Spanish banks would have to produce up to EUR16.6bn in additional collateral (cash or quality collateral that is non-existent in Europe). This of course "casts doubt on the quality of the ECB's risk management" and merely serves to confirm the Juncker-ian lies we have come to expect from Europe's leaders (economic and political). As Die Welt notes: "Critical observers ask: who actually controls the ECB?"

 
Tyler Durden's picture

Overnight Sentiment: Defending 1400 and 1.29





There have been no major overnight events or surprises, with Europe continuing a war of semantics whether the Spanish bailout is a bailout, and attempting to avoid it as long as possible while reaping the benefits of Spanish bonds which are trading at post-bailout levels for a 3rd months now, as well as whether Greece will receive more Troika money (the WSJ reported that Greece requires €30 billion through 2016 to close its funding gap: a number which will eventually double, then triple), and yet as of moments ago the EURUSD slipped under the psychological 1.2900 support, which also means that 1400 on the SPX cash is in play. Italy did not help after business confidence declined from 88.3 to 87.6 on expectations of a rise to 88.7 What news there has been is largely the realization that reality is here to stay, following misses and guides lower from Amazon and Apple, and no matter what some low-volume algo tries to represent by buying the stock in the after hours session, profitability and cash flow creation for both companies will be lower going forward. In terms of newsflow, the NYT released a report last night that China's Premier may have been hiding billions in "related-party" transactions - imagine that, and one which promptly got the NYT blocked from China's internet. Obviously this is a touchy topic for China days ahead of its internal party vote, and one which will hardly score the US brownie points with the domestic administration. Concurrently, Japan announced a new fiscal "stimulus" for a whopping ... $9.4 billion. That is roughly the amount of money needed to evade deflation for 2-3 hours. More apropos, Bild reports what Bloomberg noted earlier, namely that Merkel has no majority for reported Greek aid, further blowing up the hole that Greek finmin Stournaras dug himself in with his lies earlier this week. So while everyone is once again on edge, with the Shanghai composite sliding 1.7%, and key technical levels either breached or in play, today's session promises to be quite interesting.

 
Tyler Durden's picture

Guest Post: Before The Election Was Over, Wall Street Won





Before the campaign contributors lavished billions of dollars on their favorite candidate; and long after they toast their winner or drink to forget their loser, Wall Street was already primed to continue its reign over the economy. For, after three debates (well, four), when it comes to banking, finance, and the ongoing subsidization of Wall Street, both presidential candidates and their parties’ attitudes toward the banking sector is similar  – i.e. it must be preserved – as is – at all costs, rhetoric to the contrary, aside. Obama hasn’t brought ‘sweeping reform’ upon the Establishment Banks, nor does Romney need to exude deregulatory babble, because nothing structurally substantive has been done to harness the biggest banks of the financial sector, enabled, as they are, by entities from the SEC to the Fed to the Treasury Department to the White House.

 
AVFMS's picture

22 Oct 2012 – “ Hurricane Heart Attack ” (The Warlocks, 2002)





Mostly boring.

European equity resilience seems surprising, given the otherwise gloomier mood. No news still played out as being good news and even catch-up to US levels seems a doubtful explanation.

Beats me.

 
Tyler Durden's picture

Germany Wants To Be Europe's Currency Tsar





As all eyes and ears (and trigger fingers) are glued to the flashing red headlines from Europe's conditional unconditional OMT/credit-line/backstop/ESM malarkey and Spain's insistence that it doesn't need help yet just wonders what the rules are, Merkel stated - for absolute clarity once again - her views yesterday. As much as no-one wants to hear what the money-lady has to say - preferring instead to live in a world where promises work, FinMin Schaeuble clarified the need for a 'currency commissioner' with sweeping powers to strike down national budgets. This bombshell, as The Telegraph calls it, is really nothing of the sort; as Merkel has already made it clear that there's no money without sacrificing sovereignty. The directness of this statement though does raise questions over just what the ECB is for? Critically, dismissing Van Rompuy's spin that this is a step towards debt-pooling and euro-bills, Schaeuble made it clear that fiscal union meant "more power to police the affairs of debtor states." While the possibility remains of a precautionary line of credit, the Germans stated: "one thing is clear: whatever is requested, it won't be without conditions," and as Citi's Steve Englander noted "It's all down to haggling over the price now."

 
Tyler Durden's picture

Moody's Refuses To Junk Spain Ahead Of US Election, Raffirms Baa3 Rating - Full Text





For those who are curious why Tim Geithner has been invisible in the past 2 months, the answer is he has been manning the phones like a true patriot, and making sure nobody dares to rock the European boat ahead of the US election (as was already disclosed), in this case exemplified by Moody's just released announcement that the rating agency will not downgrade Spain to junk, soaring debt, collapsing GDP and laughable unemployment rate notwithstanding (unless of course the ECB fails in its mission to scare all shorts from approaching within 10 miles of an SPGB, and Spain loses private market access again, in which case Moody's would proceed with a "multiple notch downgrade"). At least not until the US election that is. After that... well, with the fiscal cliff, debt ceiling, Greece vs Troika, etc, etc, buy VIX.

 
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