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"Wind The Speakers All The Way Up To 11"

Tyler Durden's picture




 

Via Mint - Blain's Morning Porridge,

The phrase "Constructive Discussions" will have us all pulling our hair out within a few weeks. Markets will be rock and rolled by anything anyone says about the Fiscal Cliff. Get over it - markets tend to over-react. But while the world awaits an outbreak of American common sense, Obama is off to Burma. Yep. Setting the scene for the rest of the week - no doubt we will be hearing more about Fiscal Cliff, Greece, Spain and perhaps a leavening of Italian politics.

The received European news-flow, (ie the stuff the Euro Elites want to you read and believe), says progress on Greek Compromise and close to a solution on Tuesday with Schaeuble confident of "closing the funding gap". All of which means Greece is essentially solved - well for a while longer. As long as no one asks any difficult questions about debt sustainability and unlikely targets, haircuts for the ECB, or how the economy is doing, the Greece will be just fine and dandy.

Unfortunately some folk haven't been reading the script - Lagarde has woken up to the fact she heads an "international" organisation and says a solution must be based on reality, solid and sustainable. Asmussen says a new programme will be needed, and the EU Energy Commissioner (?) says debt restructuring for the "official sector" will happen and therefore real losses are unavoidable. er.. who let him opine?

This whole question of the ECB and other institutions sharing in Greek losses is crtitical - it will be the first time governments sustain real hits. The IMF's growing spat with Europe on Greece might potentially derail the cosy fudge Europe seems to be preparing for later this week. So. keep an eye on Greece next few days.

Spain yields continue to creep higher. Catalonia is demanding more government aid. According to Bberg BlueBay are predicting Spain will be forced to beg OMT aid next year as the sheer scale of its $207 bln funding load for 2013 comes to the fore. NSS moment. Bailout is going to cause substantial political weakness for the Rajoy government. Basically.. the problem has not gone away. If Spain takes a bailout, we suspect investors will demand other economies get the same protections, hence Italy next.

Last week the pro-Europe FT was telling us Italian voters and business love Monti. This morning a Bloomberg story suggests he'd struggle to take more than 36% of a popular vote. (Not that votes or elections have bothered him before.) I got taken to task on Friday night by a rather clever young Italian lady who was "bored" of my incessant attacks on Italy - but got forgiven when I explained my love of the country, the wine and the cars, but that the problem is political and the lack of energy to change the country. Italy politics have fractured into deeply unpopular rump mainstream parties and newly emerged local interest groups - which means there isn't any political gravity to enforce change. As a result, a government of "appointed technocrats" is the best shot. None of which will go down well with the 62% of Italians in a recent survey who said Monti should not be allowed a second term.

And a couple of comments in the press about Irish bonds over the weekend. It's well know Franklin Templeton has built up a substantial 10% plus stake in Irish Govies - so the question is this year's rally in Ireland on the back of one buyer, or has Ireland fundamentally improved? Actually nothing in Europe has changed. Ireland remains essentially flat-lined - as we pointed out a few weeks ago, booking European profits into tax-advantaged  Ireland does not mean Ireland is creating jobs...

Oh. Cyprus. well.. what more is there to say.. bust bust and bust.

Away from the immediate news, markets show no signs of slowing down ahead of the year-end break. New issue market is still hoppin (although we have seen some bonds underperform recently), and everyone is fully absorbed in the hunt for yield. There is a wall of money still to be invested.

Towards the end of 2011 the market looked at 2012 with severe doubts on the Euro. The main investment strategies were based around further European ructions and the likely spread of contagion - market was entirely wrong. Europe rallied.

For 2013, it's looking to be about deepening European recession, sustained low interest rates and minimal liquidity. On the other hand potential growth in the US could make US bonds look extremely unattractive.

 

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Mon, 11/19/2012 - 09:26 | 2995503 slaughterer
slaughterer's picture

Time to play "Obama versus the Zombies":

http://www.freeonlinegames.com/game/obama-vs-zombies

 

Mon, 11/19/2012 - 09:31 | 2995511 GetZeeGold
GetZeeGold's picture

 

 

All the zombies are waiting for the press conference.

Mon, 11/19/2012 - 09:51 | 2995560 kaiserhoff
kaiserhoff's picture

and the difference is?

Mon, 11/19/2012 - 09:28 | 2995504 fonzannoon
fonzannoon's picture

Potential growth in the US.....

funny shit.

Mon, 11/19/2012 - 09:31 | 2995510 spastic_colon
spastic_colon's picture

anything to ramp the market into black friday, even europe is playing along.

Mon, 11/19/2012 - 10:29 | 2995675 stocktivity
stocktivity's picture

Santa rally can't be stopped until reality hits in January

Mon, 11/19/2012 - 09:29 | 2995506 JPM Hater001
JPM Hater001's picture

Pedal meet metal.

Mon, 11/19/2012 - 09:31 | 2995512 mumcard
mumcard's picture

The shovels are finally ready!  They come to bury the USA not raise it.

Mon, 11/19/2012 - 09:34 | 2995519 LawsofPhysics
LawsofPhysics's picture

Bring it.  The sooner this is resolved the better.

Mon, 11/19/2012 - 11:23 | 2995828 Itgoestoeleven
Itgoestoeleven's picture

Like you, I often think the sooner the better. But I can't help feeling the bottom  can't get much worse so why not drag it out. No matter how much I prep, I still feel unprepared so the more time I have, the better.

Good luck.

Mon, 11/19/2012 - 09:32 | 2995514 slaughterer
slaughterer's picture

"On the other hand potential growth in the US could make US bonds look extremely unattractive."

Do I detect a hat tip to TBT?

TBT or not TBT, that is the question.  

Mon, 11/19/2012 - 09:32 | 2995515 BurningFuld
BurningFuld's picture

The ONLY way Greece defaults is when the people have had enough and force or overthrow the government. This is after all what was required in Iceland. No politician has the balls to do it on their own.

Mon, 11/19/2012 - 09:43 | 2995543 Oh regional Indian
Oh regional Indian's picture

We are listening to a Laggard and an Assmusen.

Betray-Us was All In to a Broad-Well.

Enough said.

We are living a comic reality.

ori

Mon, 11/19/2012 - 12:13 | 2995596 booboo
booboo's picture

as The One floats above the fray in the International scene making Great Strides in the Orient, he will not be soiled with Domestic matters. The "Magic Negro" will come home to pardon the turkey and bless us all.

Mon, 11/19/2012 - 11:04 | 2995775 Shevva
Shevva's picture

It'll be interesting where the country a banker lives in becomes a no-go zone so they are left in a small couple square miles in the capital next to the fortified politicians homes. They'll need some sort of robotic cop to protect them when it all comes crashing down.

And a thousand bankers screamed save us robocop and then realised they laid them all off for just one more bail out.

Mon, 11/19/2012 - 11:16 | 2995809 Aurora Ex Machina
Aurora Ex Machina's picture

I was under the impression, at least in Europe, that this already existed. Monte Carlo or Luxembourg, take your pick.

Mon, 11/19/2012 - 14:55 | 2996423 whotookmyalias
whotookmyalias's picture

This one is louder because it goes to 11.

Mon, 11/19/2012 - 15:14 | 2996481 Iam_Silverman
Iam_Silverman's picture

Wow.  I need to slow down and read more for comprehension.  I read this line three times:

Lagarde has woken up to the fact she heads an "international" organisation

and saw:

Lagarde has woken up to the fact she had an "intentional" orgasm

What is wrong with me today?

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