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The BoomBustBlog BNP Paribas "Run On The Bank" Model Available for Download
Does anyone truly wonder why so many seemingly smart people in such high places of power fail to see the obvious difference between a lack of liquidity and true insolvency? I don't! Everyone knows what time it is, they just don't want to admit that they looked at their watch! 
It appears that we have successfully hit another home run with out BNP short call in the beginning of the third quarter (Bank Run Liquidity Candidate Forensic Opinion, over 50% decrease in price), and apparently timed the bull run with underpriced call options to the upside as well (Trading Opinion and Analysis 9-14-2011) as BNP rallies on nonsense news adding puff and premium to those cheap calls. This post is a constructive followup to the quite popular piece earier this week wherein I took the wraps off of our prime French bank run candidate. If you haven't read it yet, I strongly suggest you peruseThis Is Why BoomBustBlog Is THE Place To Go For Hard Hitting Research: BoomBust BNP Paribas?
The media has been awaken to the BNP situation a little more than a quarter after we prepped BoomBustBlog subscribers, as is exemplified by the following:
- BNP Launches Restructuring Plan Wall Street Journal
- BNP Paribas Bonds Tumble Amid U.S. Money Market Funding Concerns San Francisco Chronicle
- BNP Paribas Bonds Tumble Amid Concerns Over Funding in U.S. Money ... Bloomberg
Now, that the perception of panacea is being traded upon, that is panacea in the form of liquidty attempting to solve solvency issues, we will now attempt to illustate the folly of such...
Stocks Jump as ECB Offers Loans to Banks [Bloomberg]
Stocks and the euro rose, while Treasuries slid, as the European Central Bank and international policy makers coordinated to lend dollars to banks to help tame the credit crisis. Energy and metals led commodities higher.
... The ECB said it coordinated with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to extend three-month loans to euro-area banks in an effort to ensure they have enough cash for the rest of the year. The announcement added to optimism that policy makers were containing the European sovereign debt crisis after the leaders of France and Germany yesterday confirmed they will support Greece’s continued participation in the shared euro currency.
“It is about protecting the liquidity of the European banks,” Howard Ward, a money manager who helps oversee about $36.1 billion for Gamco Investors Inc. in Rye, New York, wrote in an e-mail. “The private sector has pulled back from funding these banks. So central banks are stepping in to make that dollar funding available. Good news is the banks get their dollar funding. Bad news is that the situation has gotten this dire.”
... The Stoxx 600 advanced for a third day, climbing 2 percent, as banks led gains in all 19 industry groups. BNP Paribas SA surged 12 percent in Paris and Italy’s Intesa Sanpaolo jumped 8.4 percent.
May I take this time to congratulate resident trader Eurocalypse on a most wonderful call, referencing the trading opinion from9/13 and 9/14 - Trading Opinion and Analysis 9-14-2011
A very, very well timed call indeed. Now, back to the Bloomberg article...
“It’s nice to see that the risk factors coming out of Europe are abating somewhat,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “That addresses the liquidity issue that would be threatening the European banking system.”
... The cost of insuring European sovereign and corporate debt extended declines after the ECB announcement and as the prospect of default by Greece receded. The Markit iTraxx SovX Western Europe Index of swaps tied to 15 governments dropped 13 basis points to 330 as of 2:45 p.m. in London, the lowest since Sept. 9 and signaling an improvement in perceptions of credit quality. Swaps on France fell 10 basis points to 171, contracts on Italy dropped 29 basis points to 442 and Spain fell 22 basis points to 370, CMA prices show.
Cheap dollar funding is not going to help BNP anymore than it helped Lehman. I have prepared several models to illustrate such, and are designed to go hand in hand with both our illustrative trading supplements and our forensic research on BNP - namely:
French Bank Run Forensic Thoughts - Retail Valuation Note - For retail subscribers- Bank Run Liquidity Candidate Forensic Opinion - A full forensic note for professional and institutional subscribers
The first model (all are cast in Excel 2010 format [.xlsx]), 
BNP Exposures - Free Public Download Version, is available to the public free of charge and is designed to spark the discussion of Whether Another Banking Crisis Is Inevitable? I will be discussing this model, and its ramifications on Max Keiser, Russian Television - to be televised Tuesday. It should be interesting. Here are some screen shots.
The Impairment Scenarios: a very important concept that practically the entire European banking systm has somehow forgotten to address.
Trading and HTM inventory at Level 1,2,3 or fantastical fanstasy?
For those not familiar with the banking book vs trading book markdown game, I urge you to review this keynote presentation given in Amsterdam which predicted this very scenario, and reference the blog post and research of the same - and then revisit this free model and reapply your assumptions:
- a research note to subscribers, The Inevitability of Another Bank Crisis,
- followed by blog posts on the same, see Is Another Banking Crisis Inevitable?
The next nugget of knowledge is the BNP Exposures - Retail Subscriber Download Version. It enables users to simulate an anecdotal bank run - for retail subscribers only of course. In addition to those above, it sports...
For those professional investors and institutions, namely hedge funds, asset managers, regulators, high net worth individuals with ties to BNP and family offices, heres to you. This is not a toy, but a tool that can truly communicate why you feel BNP may, or may not be a candidate for a bank run - contingent upon your inputs: BNP Exposures - Professional Subscriber Download Version. Additional screenshots above and beyond that included above...
Income statement implications of a true bank run...
Let's recap the BoomBustBlog perspective before I offer my opinion for the upcoming week...
Saturday, 23 July 2011 The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!: I detail how I see modern bank runs unfolding
image012
Thursday, 28 July 2011 The Mechanics Behind Setting Up A Potential European Bank Run Trade and European Bank Run Trading Supplement
I identify specific bank run candidates and offer illustrative trade setups to capture alpha from such an event. The options quoted were unfortunately unavailable to American investors, and enjoyed a literal explosion in gamma and implied volatility. Not to fear, fruits of those juicy premiums were able to be tasted elsewhere as plain vanilla shorts and even single stock futures threw off insane profits.
Wednesday, 03 August 2011 France, As Most Susceptble To Contagion, Will See Its Banks Suffer
In case the hint was strong enough, I explicitly state that although the sell side and the media are looking at Greece sparking Italy, it is France and french banks in particular that risk bringing the Franco-Italia make-believe capitalism session, aka the French leveraged Italian sector of the Euro ponzi scheme down, on its head.
I then provide a deep dive of the French bank we feel is most at risk. Let it be known that every banked remotely referenced by this research has been halved (at a mininal) in share price! Most are down ~10% of more today, alone!
- French Bank Run Forensic Thoughts - Retail Valuation Note - For retail subscribers
- Bank Run Liquidity Candidate Forensic Opinion - A full forensic note for professional and institutional subscribers
For those who claim I may be Euro bashing, rest assured - I am not. Just a week or two later, I released research on a big US bank that will quite possibly catch Franco-Italiano Ponzi Collapse fever, with the pro document contianing all types of juicy details...
- advertisements -
The weirdos are out today for some reason. Anywho the playbook is already in place: a euro TALF with massive markdowns of sovereign debt followed by HSBC and JPM swallowing up everybody. The euro-landers can go the IMF route of course. That would make you happy I'm sure. That would total liquidation followed by a NATO security detail to deal with any outliers. I wouldn't go there if i were Europe. Of course they could always fix the problem themselves......hmmmmm. There's an idea.
Reggie, I want you to know today I was asked to certify my certificates (Passport etc) to prove who i am (in duplicate) so that I may open a stockbroking account.
Yep, apparently having a Photo ID Drivers Licence is not enough to open an account. Nor the fact I've already been certified with my bank where the money is coming from to fund the account. I now need an accountant, police or Embassy etc to look at my licence, look at me, confirm the 2 are the same, sign a piece of paper and post it to my stockborkers (one of whom I've known for 20 years and knows perfectly well who i am)
When I sold my propery last year the estate agent who sold me the house originally 10 years earlier, who has lived barely 80 meters down the road from me for 10 years as my neighbour, and who I placed the house with to sell it then asked me for my passport to 'comply' (hate that word) with State red tape.
Why am i telling you this Reggie. Fuck knows! To get it off my chest probably and because i now consider you a webbo friend who is good at technicals.
This Europocalypse you predict. Can it hurry the fuck up please... Banks, and primarily Govts, crumbling cannot come soon enough. I want to open accounts with a handshake, not 10 pages of forms arseholes behind Govt desks think up to tell the private sector how to conduct its business.
That's maybe why i wrote. i'd like to know how soon this institutionalised shit bag goes down the toilet where it belongs.. how soon Reggie, lie to me if neccessary that it'll be real soon?!!!
tim geitner says we should do the grown up thing and get these guys to follow our lead managing our accounts, goods, currency, and global labor... you know just face the facts.... back to work
.
man
"Countries' Banks: Cross-Border Exposure"
http://yfrog.com/z/eizblg
Interesting chart courtesy of Erica, a beautiful swedish girl and fixed income strategist at SEB.
( http://twitter.com/SEK_bonds )
Wonderful clarity, Reggie. The Liquidity Heatmap view alone goes far to uncreating the gamesmanship scams of the overprivileged crims.
Not unrelated...using war to distract attention from insolvency might also be useful entertainment provided by AngloAmerFrench schemers. Lybia comes to mind.
Good Stuff Reggie...Thanks
Come on Ya'll!! Reggie and his Pep's are in! and we need to pull together to put some downward pressure on those Froggy Fucks who supplied us with guns to fight the English!
the Froggies gave you Yanks the guns because whenever the clucking Cocks pick up arms themselves against the English they get freekin buried
This is some heavy, heady stuff and exemplifies exactly how blogs and new media are transforming both mass media and financial analysis and opinion. Why don't you guys call your broker and see if he was planning on sending you something similar?
I've already contacted my wealth manager to make sure he subscribes. Thanks RM!
or, one can call and fuck with them. like janus does. janus luvs to pour him some salt in the wound! (they're all old frat boy friends; and, trust me, these ass-clowns deserve every bit of it...they was laughin at janus five years ago when he made his first tiny silver purchase -- now, well, i guess it's fair to say i've added a lil bit to my shiny stacks! heh heh heh!)
one such bastard is named David Bronner (dat's right, bitchez; janus is gonna slowly name NAMES), and in alabama, he's a big SOB. (look him up people). i didn't go to school with him; he's much older -- but this is a small town to be a state capital.
anyway, at a Xmas party in the local RSA tower several years ago, he was hitting on this lil cutie i was toting around with me...long story short, in order to try and emasculate his better (in every regard save money -- but i'm just starting to learn to add, BRONNER), Janus, and try and make some headway with the honey on my arm, he engages me in conversation. well, i'm testin out my ideas on markets and whatnot even back then, and i sez, "dr. bronner, what'd ya think of gold and silver -- looks like PEs and such are zany to lil ole janus?"
he then proceeds to try and make a spectacle of me...guffawin about rednecks and their gold and silver. really, he was a sloppy insolent DRUNK. a real tragiocomic figure, he was.
anyway, i bumped into him not long ago. he remembered. no apology...at least not yet.
so, residents of alabama -- this is the feckless imbecile to whom you've entrusted your BILLIONS! Dr. David Bronner -- king of the double-scotch on the rocks!
and, as y'all know, janus is a liberal, and it hurts me to see anyone suffer; so i defer to the words of napoleon:
"we must laugh at a man to avoid cryin for him"
anyway, the market's up another 1.66% on the dow and about the same on the s&p.
JANUS DOUBLES DOWN! 4Xleveraged short at future's price as of 5:15 central (I'm still way into the house's money) i'll explain after supper.
as always, Mr. Middleton, my hat's off to ya,
janus
Janus, Dr. Bronner must have pissed you off good... that- or you are hurting after the LSU beating.
When people call me a redneck, I get all puffy-chested; rednecks should be pretty well positioned to deal with the new long term realities.
I'm looking forward to reading about your double-dowm, as well as any additional dirt you intend to shovel, I will be gaming for fiat, myself (donkey roundup at the casino).
well, to give the man credit, he did use the word 'provencial' rather than 'redneck'; but janus knew EXACTLY what he meant. if i remember correctly, he's from minnesota or something...i remember him boasting that 'we' owned a TV station or something in hawaii; and that the alabama robert trent jones (which is awesome, btw) would get lots and lots of promising potential for vactioners from the ads 'we' get to broadcast for "free". i remember concluding that he was a total nitwit or a snake or both after hearing that mess.
oh, yes, i can just see some wealty couple from sweden checkin in, turnin on the tube, and comin away mezmerized from the experience of seein an RTJ course on TV juxtaposed against Kona or Maui; yes, i can see it now:
Hans: peevs geeten megen de alerbamershnit golfsnirper on da telrfophoneriplle!!! vie musteingrraten go dis minuten!
actually, here's some real swedish (it's phonetic; so it won't translate well on google; but maybe some swede out there will recognize what i'm saying):
dro oat halvetia; dren yav la burge dren laven! (that's gotta be so goddam butchered it won't make any sense -- but, Hans, holla back some day!!!)
Hans was a pimp in North Georgia back in the day.
so, yeah, let's talk about anything but LSU. gotta give those bastards respect! i mean, DAMN!! they lay the fuckin WOOD! that was one of the hardest hitting games i've EVER seen...oh, what i wouldn't do to be that young again -- if only for friday nights. you wanna know what janus would be doing right this very moment about 18 years ago? i'll tell you this much; it was red-headed and georgeous! mmm mmm mmm. bright green eyes! olive skin that held a tan well. sweet, sweet honey bee. sugar sweet! miss ya, red.
i think i'm gonna read some john milton and some ts eliot tonight -- just so i can get the distance from this shit i need for meditative reflexion! i think you're learnin what i'm talkin about.
how's bros K going?
who do you identify with most so far?
what do you think of the father?
unless a grain of wheat dies, it dies unto itself; but if it dies, it bringeth forth much fruit!
(i can't wait for you to get to Ivan's nightmare -- oh, how i envy you experiencing that for the first time! janus was, once again, livin deep in the country, right oustide of aiken, SC (near the nuclear weapons facility -- heh, heh, heh) when i read that book. i saved it for last on my doestoevsky list; seein how he combines ALL his major themes therein. but, really, there's just as much merit working backward...you'll arrive at an inevitable conclusion which ever way you go. be ware!
you're warned!
you're life will be forever changed after you 'experience' that book.
http://www.youtube.com/watch?v=FqDWVErme40&feature=related
janus
Hear-Hear! Thank you Reggie!