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"No-Brainer Trade Of The Year" Plummets As Bondholders Duck Ahead Of Possible Greek Bankruptcy Tomorrow

Tyler Durden's picture





 

Was it only two weeks ago that the smartest investors in the room were calling 'buying Greek bonds' as the no-brainer trade-of-the-year? Sad to say that for such power-houses of intellectual prowess as Greylock (who if you remember could not get enough media coverage during the PSI discussions) have once again grabbed that falling knife with 3 hands and lost a finger, thumb and perhaps even their toes. Longer-dated Greek bonds have dropped to an all-time low price of 13.75 cents on the Euro (a magnificent 27% drop in 2 weeks since the NYT ran the buy it now or you're a big loser article). These bonds are down over 43% since the PSI deal and have plunged in price in the last few days as the reality of a potential bankruptcy of absolutely cash-strapped Greece comes to bear tomorrow with the EUR430mm bond due.

Perhaps instead of paying 2-and-20 to listen to nothing but glorified knife-catching heads-I-win-tails-its-your-money-we-lose funds, investors should heed digital dick-weeds for back in January we described in detail exactly how to trade Europe this year; and those non-Greek-law bonds have returned 31% (or 135% annualized since that time).

...and while we know that these bonds were/are illiquid, this BVAL chart fits with the chatter we hear from desks where there is little trading now (obviously) as those in the know hold and those not in the know remain in the dark.

Chart: Bloomberg

 


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Mon, 05/14/2012 - 13:52 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"No-Brainer Trade Of The Year" Plummets As Dead Duck Greek Debt Holders Bond Ahead Of Possible Greek Bankruptcy Tomorrow"

Fixed it for ya. :)

Mon, 05/14/2012 - 13:58 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Alex Jones is going to need to rethink his theory - his theory is the fallacious logic "If A then not B" by means that "If the PTB say something, it is the opposite" (he admits this)...so, today, the CEO of Total says Peak Oil is not real, they have plenty of reserves. So, Jones, now he must be a Peak Oil Theorist, right?
THE debate about peak oil is over and the world has used just a fraction of the petroleum it will be possible to extract, an expert believes.

Speaking at the Australian Petroleum Production and Exploration Association (APPEA) 2012 conference in Adelaide, oil major Total's chief executive Christophe de Margerie said new sources of petroleum, such as tight gas and shale oil, meant that the world had ample supplies of petroleum.

Mr de Margerie said while there were economic and environmental issues which would affect how quickly resources were exploited, there was "definitely not a concern about reserves''.

Peak Oil Debate Over, Say EXPERTS:

http://www.adelaidenow.com.au/business/peak-oil-debate-is-over/story-e6frede3-1226354771053

Mon, 05/14/2012 - 14:02 | Link to Comment EscapeKey
EscapeKey's picture

The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth

http://ftalphaville.ft.com/blog/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

 

Mon, 05/14/2012 - 14:24 | Link to Comment redpill
redpill's picture

Expressing it in dollar amounts clouds the issue because then you get into fiat values.  The actual equation is: how many barrels of oil does it take to get one barrel of oil out of the ground?  Currently that ratio is still well under 1, but eventually it won't be, and that will be the end.

Mon, 05/14/2012 - 14:35 | Link to Comment EscapeKey
EscapeKey's picture

I don't disagree with you, especially considering a marginal price increase is a self-perpetuating monster, but at present time the Dollar is the generally used measure.

Mon, 05/14/2012 - 14:38 | Link to Comment Killtruck
Killtruck's picture

And when that ratio nears one or better, we start calculating how rounds of 5.56  it takes to procure one barrel of oil.

Hmm? What's that? I should look around? ...oh.

Mon, 05/14/2012 - 19:54 | Link to Comment boogerbently
boogerbently's picture

Here's the financial/investment lesson, here:

Anything times zero = zero

Tue, 05/15/2012 - 13:30 | Link to Comment SpaceMonkey603
SpaceMonkey603's picture

While you get into fiat values they are still important because they express the relative difference in value between alternative forms of energy. The concept of "barrel to barrel" while it is nice, simple, and easy to understand, it is incorrect. Hypothetically say we have cheap energy (think units of energy i.e. btu's) in the future for industrial uses but still rely on oil for transportation. We will continue to utilize greater energy content then is available in a barrel of oil to extract one because of the intrinsic value of the form of the energy and it's intended application. In that scenario, we would still be exploring for and producing oil at a ratio greater then 1 to 1 and I can assure you, if this hypotentical situation arises we most certainly will be doing it. We have to be able to monetize energy content when we have various sources with various applications, no offense to your position, it makes logical sense on the surface, but there is a great deal more to energy markets and the oil industry in particular then can be summed up in 3 scentences.

Mon, 05/14/2012 - 14:06 | Link to Comment tocointhephrase
tocointhephrase's picture

Who said we were running out, more so, the cost to get it out of the ground/sea bed....

Mon, 05/14/2012 - 19:52 | Link to Comment boogerbently
boogerbently's picture

....but will anyone learn the lesson, here, about greed?

Not while they have US pay them for their mistakes. (wow, it's the same way we raise our kids......everyone get's a trophy).

Mon, 05/14/2012 - 14:05 | Link to Comment LawsofPhysics
LawsofPhysics's picture

< sarc on > Wow, that must be why the cost to recover oil has been going down and the markets are being flooded with a huge glut of cheap oil.  < sarc off > 

How many more "experts" do we need to piss down our backs and tell us that "it's raining"?

Mon, 05/14/2012 - 14:16 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Just don't eat that (global cooling) yellow snow.

http://www.youtube.com/watch?v=TLIppgE45wM

Mon, 05/14/2012 - 15:01 | Link to Comment Drachma
Drachma's picture

Was a hundred degrees below zero...And my mama cried.

Mon, 05/14/2012 - 14:52 | Link to Comment blunderdog
blunderdog's picture

Yeah, right, just like that's why global oil production continues to climb at a steady rate.

[drool]

Mon, 05/14/2012 - 14:56 | Link to Comment Drachma
Drachma's picture

The equation is that simple then? Recovery Cost und Supply? I would say you are missing quite a few variables, tangible and intangible. Cheers.

Mon, 05/14/2012 - 15:39 | Link to Comment ejmoosa
ejmoosa's picture

...and it's warm rain because of "global warming".

Mon, 05/14/2012 - 16:10 | Link to Comment Widowmaker
Widowmaker's picture

ive got more than 26 years of dealing with faggot experts.  The only thing i can say is piss is unlimited, and the experts are arsonists.

Mon, 05/14/2012 - 14:23 | Link to Comment PivotalTrades
PivotalTrades's picture

Yes and that fraction is 7/8s

Mon, 05/14/2012 - 21:43 | Link to Comment Buck Johnson
Buck Johnson's picture

There is no govt. for them to pay anything and who's authorized to pay.  The reason why the markets are red and continue to be red is the fact that they know that Greece will officially default and will be forced to leave the Euro.

Mon, 05/14/2012 - 13:51 | Link to Comment redpill
redpill's picture

Well that's easy, they just won't pay the bond.  Starting to get the picture, Europe?

Mon, 05/14/2012 - 13:55 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

For those particular bonds, that is a swap trigger.

Odds seem very high that Greece will conserve cash and not pay tomorrow, triggering swaps.  This may prove a generally bullish thing as people can swagger around and point at how swaps are thus proven valid hedge vehicles.

Mon, 05/14/2012 - 14:07 | Link to Comment Dr. No
Dr. No's picture

Provided they are paid out.  I am not sure FED can bail out AIG again.  I would expect years of litigation, in the mean time Corzine type hedge funds would go belly up witing for the cash.

Mon, 05/14/2012 - 14:17 | Link to Comment Quinvarius
Quinvarius's picture

The Fed is conducting bailouts at this very moment, I assure you.  What they are not doing is talking about it.

Mon, 05/14/2012 - 16:10 | Link to Comment Widowmaker
Widowmaker's picture

i second.

Mon, 05/14/2012 - 14:28 | Link to Comment redpill
redpill's picture

For the Greek people, a swap is 1 fish for a cross-town bike ride.  They are past the point of caring about derivatives and are concentrating on how to survive in a barter economy.  They have a lot more experience with it than many other countries do, so I think they'll get along better than some folks expect.

Mon, 05/14/2012 - 13:52 | Link to Comment orangegeek
orangegeek's picture

First EU member to go bankrupt.  Others to follow - Italy, Spain, Portugal, Ireland.  Guess that will be next week's news.

Mon, 05/14/2012 - 13:53 | Link to Comment EscapeKey
EscapeKey's picture

It's ok - the DJIA is now surging on the back of "we haven't had fucking terrifying news for 5 minutes".

Mon, 05/14/2012 - 15:17 | Link to Comment resurger
resurger's picture

You cant have bad news, Must HOLD!

Mon, 05/14/2012 - 13:58 | Link to Comment Conman
Conman's picture

BTFD - Can't keep US Equity markets down on anything. Yay PPT, we Heart you!

Mon, 05/14/2012 - 14:00 | Link to Comment junkyardjack
Mon, 05/14/2012 - 13:57 | Link to Comment Burr's 2nd Shot
Burr&#039;s 2nd Shot's picture

I always wondered what "next Tuesday" would look like when the loan shark came to collect from Wimpy.

Mon, 05/14/2012 - 14:38 | Link to Comment TonyCoitus
TonyCoitus's picture

Watch it and see.  Film at 11PM.

Mon, 05/14/2012 - 14:00 | Link to Comment Broccoli
Broccoli's picture

Human nature is amazing. Everyone knows it is a ponzi scheme, but most still think they won't be the last guy on the trading floor, so there is still money to be made!

Mon, 05/14/2012 - 14:00 | Link to Comment Boilermaker
Boilermaker's picture

There is money to be made.  As long as you are one of the few to get the script prior to the next act.

Mon, 05/14/2012 - 15:16 | Link to Comment brooklynlou
brooklynlou's picture

Like WaMu, Lehman, Bear Stearns, Wachovia ....

Mon, 05/14/2012 - 15:32 | Link to Comment Nobody For President
Nobody For President's picture

LTCM!

Mon, 05/14/2012 - 13:59 | Link to Comment Boilermaker
Boilermaker's picture

...As the equities markets grind higher for no apparent fucking reason.

Mon, 05/14/2012 - 14:19 | Link to Comment Quinvarius
Quinvarius's picture

Oh...there is a reason.

Mon, 05/14/2012 - 14:58 | Link to Comment Boilermaker
Boilermaker's picture

...no organic natural reason.

Mon, 05/14/2012 - 15:01 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Carbon based reasons are over-rated anyway or is that over-sold?

What's that phrase you use? Ass slammed? Organic enough...

Mon, 05/14/2012 - 15:08 | Link to Comment FinalCollapse
FinalCollapse's picture

The short sellers' money is vaporizing and condensing on the JPM's accounts.

Mon, 05/14/2012 - 13:59 | Link to Comment I Am Not a Copp...
I Am Not a Copper Top's picture

No-brainer trade of the year is buy everything at 11:30 EST

Mon, 05/14/2012 - 14:03 | Link to Comment Bill D. Cat
Bill D. Cat's picture

That trade will last ..... until it doesn't .

Mon, 05/14/2012 - 14:08 | Link to Comment Broccoli
Broccoli's picture

No brainer trade of the year is betting on valuation uncertainty and disfunctional trading platforms dressed up as markets.

So PMs in your mattress and buried under your hydrangea bush. And if you must gamble like me, serve yourself up with a helping of day trading artificial indexes of uncertainty. Buy the calm, sell the storm, it is the way to play bullshit markets.

Mon, 05/14/2012 - 19:59 | Link to Comment boogerbently
boogerbently's picture

Buying the USDollar is the SAME "no brain trade".

We ill give you 1/3 of a percent per year for your money, and inflation will rise 2% per year. Net loss, 1.7% per year. Well, at least it's keeping gold prices down......hey, wait a minute !!!

Mon, 05/14/2012 - 14:02 | Link to Comment rubearish10
rubearish10's picture

There's a colored Swan approaching.

Mon, 05/14/2012 - 14:26 | Link to Comment junkyardjack
junkyardjack's picture

That's racialist 

Mon, 05/14/2012 - 14:26 | Link to Comment farmerjohn2112
farmerjohn2112's picture

Natalie Portman is so fine... just sayin'.

Mon, 05/14/2012 - 14:05 | Link to Comment firstdivision
firstdivision's picture

Why the dump?  Look at equites, they've already been able to shed off 50% of reality that set in today.  Equites do swimingly well when they are off their Clozapine and back on the glue.

Mon, 05/14/2012 - 14:03 | Link to Comment divedivedive
divedivedive's picture

One of the pieces I don't understand relates to this post from February. Wasn't all this anticipated ? Didn't the ECB threaten to not make the payment ? and then werent't some assurances worked out ? If so, and I were involved in any of those conversations - Greece would not ever, ever get another dime from me.

Samaras Pledges To "Renegotiate" Bailout Pact After April Elections

http://www.zerohedge.com/news/samaras-pledges-renegotiate-bailout-pact-after-april-elections 

 

Mon, 05/14/2012 - 14:02 | Link to Comment youngman
youngman's picture

"Greece will conserve cash "...you are assuming they have any left..I bet they have been paying salaries in advance the last few days....get it while you can...I want my vacation pay for 2015 now thank you.....money is just being blown out everywhere in Greece..if they have it in their government accounts....take it...that is the Greek way

Mon, 05/14/2012 - 14:04 | Link to Comment Stoploss
Stoploss's picture

They strugglin a lil bit today. Lil bit..

Mon, 05/14/2012 - 14:06 | Link to Comment fonzannoon
fonzannoon's picture

It baffles me that the performance of these bonds is in line with the performance of the companies that mine the most precious metals out of the ground.

Mon, 05/14/2012 - 14:05 | Link to Comment Manthong
Manthong's picture

How big is it?..

Can't Buffet just write a check for it?

 

Mon, 05/14/2012 - 14:22 | Link to Comment Quinvarius
Quinvarius's picture

In fact, Buffet will write a check for it.  Who do you think sells CDS?

Mon, 05/14/2012 - 20:02 | Link to Comment boogerbently
boogerbently's picture

He could just BUY Greece, but it comes NO WHERE NEAR his guidelines as a good investment.

Mon, 05/14/2012 - 14:06 | Link to Comment The worst trader
The worst trader's picture

Buy the Fucking dips, haven't we learned anything?

Mon, 05/14/2012 - 14:29 | Link to Comment Zero Govt
Zero Govt's picture

all good things come to an end, nothing lasts forever

this may be a dip to buy too far

Mon, 05/14/2012 - 14:06 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Paging Max Fischer...

Mon, 05/14/2012 - 14:29 | Link to Comment Zero Govt
Zero Govt's picture

Max is currently to be found digging a hole in the sand ...to bury his head in

Mon, 05/14/2012 - 14:42 | Link to Comment TonyCoitus
TonyCoitus's picture

I like reading Max.  Hearing an opposing viewpoint is beneficial.

Mon, 05/14/2012 - 17:36 | Link to Comment resurger
resurger's picture

I like Reading him too, he is so fucking AMAZING, Good Looking and SMART!

I will vote for him , I love his thoughts, the way he writes, thinks, shits, farts ...

He is 3 levels or maybe 4 below god

Mon, 05/14/2012 - 14:07 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Uh, the "smartest investors in the room" are really nothing more than the best snake oil salesmen that Wall Street has... that group includes the likes of 'Jimmy Dimonds,' 'Uncle BEnron Bernank,' 'Alan Greenpondscum,' 'Angelo Gizzillo,' 'Dickhead Fuld,' and lest we forget the ultimate snake oil salesman, 'Lloyd Banktime.'


Mon, 05/14/2012 - 14:06 | Link to Comment LongSoupLine
LongSoupLine's picture

No brainer trade of year?...

All problems go away at European closing bell...well, until Europe opens again of course.

Mon, 05/14/2012 - 14:07 | Link to Comment carbonmutant
carbonmutant's picture

CACs anyone?

Mon, 05/14/2012 - 14:17 | Link to Comment rubearish10
rubearish10's picture

Ther'e just no "natural" selling cycle. Bumfucking mindboggling turdackle whackle frackle and mysterious. What? Cash is not ok? Ummm.

Mon, 05/14/2012 - 14:26 | Link to Comment Zero Govt
Zero Govt's picture

this'll set a precedent for the rest of Govt debt: 'Bonds Away'

watch 'em all leg-it out of the sector, except the zombie banks of course mandated by ECB liquidity to but this crap 

Mon, 05/14/2012 - 14:36 | Link to Comment Zero Govt
Zero Govt's picture

"New York Times ran the buy it now or you're a big loser article"

a journalist never more deserving of a good monkeyhammering

Mon, 05/14/2012 - 14:35 | Link to Comment Madcow
Madcow's picture
This is the ultimate "Rube Goldberg Machine" - watching the dominoes fall and daily chain unravel into a defaltionary vortex will be fascinating to watch - so long as you're not living in a big city in what was once called the "West" -  a preview of what's to come over the next 10 years ...  http://www.youtube.com/watch?v=qybUFnY7Y8w&feature=fvsr
Mon, 05/14/2012 - 14:48 | Link to Comment Navymugsy
Navymugsy's picture

When Ireland defaults I'll finally get my apartment near the river Liffey on the cheap! There won't be any cops, firemen or sanitation but hey, you gotta economize somehow...

Mon, 05/14/2012 - 14:50 | Link to Comment Muppet
Muppet's picture

Ron Paul quit? Bloomberg just said

Mon, 05/14/2012 - 14:54 | Link to Comment Bastiat009
Bastiat009's picture

Yep .. the campaign made it official.

Mon, 05/14/2012 - 15:03 | Link to Comment forexskin
forexskin's picture

He sees the writing on the wall. Baraomney is going to the be bag holder for this coming shitstorm, and rightly so.

Liberty Forever!

Tue, 05/15/2012 - 00:33 | Link to Comment StychoKiller
StychoKiller's picture

Ron Paul only has to hold onto 178 delegates to keep the Romneylan from getting the nomination outright.  Methinks some new planks will be added to the party platform (and then used to slap some banksters upside the haid!)

Mon, 05/14/2012 - 14:55 | Link to Comment Crash2012
Crash2012's picture

Am I the only one wondering if the JP Morgan loss is tied to this Greek bond problem?

Mon, 05/14/2012 - 15:00 | Link to Comment sockratte
sockratte's picture

looks like greece also prepares for tomorrow with its coalition talks...

Mon, 05/14/2012 - 15:08 | Link to Comment Bastiat009
Bastiat009's picture

Lending money to a broke country is never a good idea.

Yet, for now, it is not true in the US.

Tue, 05/15/2012 - 00:34 | Link to Comment StychoKiller
StychoKiller's picture

Wall street is just a Potemkin Village...

Mon, 05/14/2012 - 15:15 | Link to Comment franzpick
franzpick's picture

New daily bank lows and BKX falling apart at 3pm.  The JPM $100 BIL trade and $2-4 BIL loss is surely the camel's nose in the yield-chasing tent, and everyone but TD is ignoring or covering it up.  My screens point to JPM 32, now back to a 35 handle, and equity indices down 3% more to SPX 1300, so who nose? 

Mon, 05/14/2012 - 15:17 | Link to Comment YesWeKahn
YesWeKahn's picture

Bernanke's QEx is ensured. Bernanke has the deep pocket to bail out anyone if his boss is in danger.

Mon, 05/14/2012 - 15:28 | Link to Comment Joe The Plumber
Joe The Plumber's picture

I have waited 2 1/2 years for the collapse of greece. The popcorn is stale and the sodas are flat

Please please please collapse this time

Pretty please?

Mon, 05/14/2012 - 15:41 | Link to Comment Nobody For President
Nobody For President's picture

Actually, it WAS the 'no-brainer trade of the year' - you make that trade, you don't have a brain.

Worked out well.

And JPM actually broke to a 36 handle for awhile today, and is about to maybe close real close.

PPT working hard at 1530 +

DIE you fuckers...

Mon, 05/14/2012 - 15:47 | Link to Comment HungrySeagull
HungrySeagull's picture

Everytime something is sold, defaulted or whatever... someone has given up money to someone else.

Transparency in who bought what, ate which losses and so forth would be illuminating.

But now we just have charts that are generated after the fact.

Tomorrow is going to be interesting.

Mon, 05/14/2012 - 16:00 | Link to Comment blueridgeviews
blueridgeviews's picture

Wasn't it the NY Times that promoted Obuma as the cure all for what ails the US? We went from having the Flu to having Pneumonia.

Mon, 05/14/2012 - 16:31 | Link to Comment GNWT
GNWT's picture

Blue, 

Really, politics?  I thought everyone was aware that this "election" is just pro wresting...

Or do you think Bush and Obama are different?...

Or do you think Obama and Romney are different?...

Stay liquid...and short my friends...

G

Mon, 05/14/2012 - 16:10 | Link to Comment franzpick
franzpick's picture

Nice weak close with no shortcovering...new bank index daily low...tomorrow's menu may be popcorn and ouzo...

Mon, 05/14/2012 - 16:21 | Link to Comment GNWT
GNWT's picture

What comes up must come down, yin/yang, pendulum swings and hurts when it hits...

 

There is balance in this world, as the Emperor of the Han Dynasty discovered...

Stay liquid...and short...my friends...

G

Mon, 05/14/2012 - 16:40 | Link to Comment GernB
GernB's picture

"have once again grabbed that falling knife with 3 hands and lost a finger, thumb and perhaps even their toes."

Not to criticize your writing style, but eww. A little to graphic on the imagery :)

Mon, 05/14/2012 - 17:34 | Link to Comment Super B
Mon, 05/14/2012 - 20:00 | Link to Comment suckerfishzilla
suckerfishzilla's picture

Instead of Euros I bought Silver Greek Drachmas.  I wonder if those are worth anything yet.

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